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MADRID ECONOMY 2010 OBSERVATORIO ECONÓMICO TABLE OF CONTENTS FOREWORD 5 INTRODUCTION 6 POPULATION 7 ECONOMIC ACTIVITY 10 TRANSPORT INFRASTRUCTURE 15 RESEARCH AND TRAINING 17 EMPLOYMENT 19 PRICES AND SALARIES 22 EXTERNAL SECTOR 25 FOREWORD Miguel Ángel Villanueva González Member of the Governing Council. Delegate for Economy, Employment and Citizen Involvement This sixth edition of Madrid Economy appears just when the economic recovery, both of Madrid and the rest of Spain, seems to begin. This recovery is conditioned by an unstable financial framework. However, we believe that the trend change already initiated by the main indicators and the budgetary contention measures which have been implemented should ensure that a solid base is laid for long term growth in our city, the economic centre of Spain. The efficient allocation of public resources will be essential in the next few years, as the administration will have to continue managing services, maintaining standards with fewer resources, especially those which stem from indebtedness. Increased productivity, linked to improvements in training and innovation will be the key to a future for our city wich we would like it to become even more promising. This will require to implement certain regulatory reforms and consolidate a more solid and stable financial framework than the present one. The main elements which constitute the economy of the city of Madrid will be detailed in the following pages, reflecting a reality not exempt from problems, but with a future even brighter than its past. July INTRODUCTION The City of Madrid covers an area spanning square kilometres and is divided administratively into 21 districts. The area is served by highly-developed communication infrastructures, making the Spanish capital the leading logistics hub for both Spain and all of southern Europe. It also boasts an impressive network of motorways, encompassing both ring roads and radial roads, and provides the backbone for Spain s railway network, thereby providing effective connections with not only other parts of the region, but also the rest of Spain and Europe as a whole. Madrid is also home to the Madrid-Barajas airport, Spain s flagship airport and one of the largest to be found worldwide. In terms of population, Madrid currently ranks second among the cities of the European Union behind Berlin, and forms part of the third largest urban agglomeration in Europe, behind only Île-de-France, and Greater London. Over recent years, the city s appeal to foreign residents has grown exponentially to the extent that they currently represent 17.3% of the total population. Madrid s economic activity, which has experienced constant growth in the last few years, is emerging from a period of contraction which has affected all of the world s advanced economies should be the year of recovery, with the second half of the year seeing a return to growth, although the contractionary measures introduced in Spain and in the major European countries may delay this. Most indicators are pointing towards marked trend change, which is especially relevant in sectors such as tourism, which has recovered strongly since last year. The city is also a key player in the fields of innovation and technology. It is in fact Spain s heaviest investor in research and development, and exceeds both the national and European averages in terms of percentage invested of total GDP. It also plays home to a number of leading public and private universities and institutes, including prominent technology and research centres. This sector, which has recently suffered job losses after years of notable growth, is decelerating its pace of decline, and is well on the way to a return to positive values. Unemployment continues to grow but again at a slower rate, and remains lower than the regional and national rates. 6 1. POPULATION As of 2010, Madrid has a population of 3,298,004 inhabitants, twice that of its nearest Spanish competitor, namely Barcelona, and four times that of Valencia, which comes in third. This makes Madrid the second largest municipality in the European Union, behind only Berlin. Housing a staggering 7% of the Spanish population, it is home to a higher percentage of the total national population than any other major European city. The City of Madrid accounts for 51.2% of the population of the Autonomous Community of Madrid as a whole, which, with 6.45 million inhabitants, represents the third largest metropolitan area in Europe after Île-de-France and Greater London. European cities City Population % of country % of region Metropolitan Area Population Berlin 3,431, Berlín 3,431,675 Madrid 3,298, Comunidad de Madrid 6,445,499 Inner-London 3,030, Greater London 7,668,300 Roma 2,724, Lazio 5,626,710 Paris 2,193, Île de France 11,598,866 Source: General Department for Statistics of Madrid City Council (City of Madrid, 2010, provisional), National Statistics Institute (INE) (Spain and Community of Madrid, 2010, provisional), City Population (Germany, 2008, Italy, 2009 and France, 2007) and ONS (United Kingdom, 2008). Spanish cities City Population % of country % of region Metropolitan Area Population Madrid 3,298, Comunidad de Madrid 6,445,499 Barcelona 1,621, Cataluña 7,475,420 Valencia 814, Comunidad de Valencia 5,094,675 Seville 703, Andalucía 8,302,923 Zaragoza 674, Aragón 1,345,473 Source: General Department for Statistics of Madrid City Council (City of Madrid, 2010, provisional) and National Statistics Institute (INE) (Spain and Community of Madrid, 2010, provisional; remaining cities and autonomous communities, 2009). 7 MADRID ECONOMY 2010 Madrid s population has experienced growth over recent years due to the considerable influx of foreigners. As it currently stands, both overall and foreign population levels have levelled off, as can be seen from the following diagrams. Population of Madrid Source: General Department for Statistics of Madrid City Council (2010 population, provisional) and INE (official figures on population as of 1 January for other years). Foreign population (%) Source: General Department for Statistics of Madrid City Council. 8 1. POPULATION The significant number of foreign immigrants settling in the city over recent years has meant that foreign citizens currently account for 17.3% of the city s total population (roughly 572,000 as of 1 January 2010), in stark contrast to the 2.8% reported for The recent spike in the foreign population can be put down to the increasing trend among foreigners to change nationality. The arrival of people from outside Spain has enabled the city to bolster its productive capacity with foreign workers, thereby opening up the population pyramid in the 20 to 49 age groups, while simultaneously broadening the base of the population pyramid enormously as part of an intensive and necessary rejuvenation process. City of Madrid Population pyramid Source: General Department for Statistics of Madrid City Council. 9 2. ECONOMIC ACTIVITY Gross Domestic Product (GDP) for the City of Madrid in 2009 is estimated at 128,211 million euros, representing 67.8% of total GDP for the Autonomous Community of Madrid as a whole, and 12.2% of total Spanish GDP, placing it considerably above the relative weighting of the population in each of these two areas. The city s production levels exceed those of all the Spanish Autonomous Communities except for Catalonia and Andalusia, but including the Autonomous Community of Madrid itself, and likewise outstrip levels for eleven of the twelve latest arrivals to the European Union (barring Poland). GDP for Madrid and other Spanish regions (2009, in million ) Source: National Statistics Institute (INE) for Madrid; GDP estimated by the Economic Observatory of Madrid City Council. Industry (chiefly graphics, energy, chemicals, transport and electronics) contributes 7.4% of total production, while construction, which has witnessed dynamic expansion over recent years, accounts for 7.9%. Yet it is the services sector that underpins production within the City of Madrid, turning in a massive 84.7% of total economic activity. 10 2. ECONOMIC ACTIVITY Gross value added (2009, in thousand ) Millons of euros (%) Agriculture Industry 8, Construction 9, Services 101, Total 119, Source: Estimated by the Economic Observatory based on figures published by the General Department for Statistics of Madrid City Council. The most notable of these services are those geared towards companies, followed by transport and communications, property and financial services. These four groups generate 51% of gross value added for Madrid s economy and 62% of gross value added for the services sector. Services in Madrid (%) Source: General Department for Statistics of Madrid City Council. Tourism is especially important to the City of Madrid, providing employment to a large part of its population in the retail, hotel and transport sectors and the leisure industry. Overall figures for 2009 recorded 7.2 million visitors and 13.7 million overnight stays, in hotels alone. Annualized figures up to April 2010 show a growth of 4.1 and 4.9 per cent respectively, in line with the recovery of the sector which began last summer. 11 MADRID ECONOMY 2010 Tourism in the city Tourism in the city Year Travellers Overnight stays , , , , , , , , , , , , , , , ,698.4 Overnight stays by host country (year-on-year variation as % of the twelve-month average) 2010* 7, ,212.6 *12 months to April Source: National Statistics Institute (INE). Provisional figures from May The city has a significant and growing number of hotel beds to cater to the equally significant number of visitors. As of April 2010, Madrid was able to offer 76,243 hotel beds among its 869 establishments, all run by 11,908 workers, representing a year-on-year increase of 2,546 beds. 77% of the beds are offered by three, four and five-star hotels, which are in turn responsible for 77% of the total beds created over the last year. Hotel establishments Category (stars) Number Beds Employees Hotels Five 24 10,826 3,376 Four ,026 5,260 Three 75 12,643 1,523 Two/One 28 3, Total hotels ,246 10,503 Hostels Three/Two 198 6, One 430 7, Total Hostels ,997 1,405 Total ,243 11,908 Source: National Statistics Institute (INE) (Hotel Occupation Survey, April 2010). 12 2. ECONOMIC ACTIVITY Air traffic is closely linked to tourist activity. Passenger flow through Madrid Airport has recovered from the loss of passengers that began in 2008, and which was also affected by the new high speed train lines (AVE) particularly the line between Madrid and Barcelona. Passenger flow currently stands at more than 48 million passengers annually on commercial flights which puts it in fourth place in Europe and eleventh in the world. Commercial passenger numbers fell by 5.1 in 2009 compared to the previous year, although in April the fall barely constituted 0.1 per cent in annual terms. Passenger traffic for Madrid airport (average annual variation as %) Source: AENA (Spanish Airports and Air Navigation Operator). Business activity within the City of Madrid has been closely pegged to the economic and financial crisis, leading to a reduction in the number of new companies, although in this regard Madrid still stands at the forefront in Spain. Despite this gloom, more than 10,000 companies were created over the last 12 months, with a combined subscribed capital of nearly 1,400 million euros. The strength of Madrid s economy has been more than evident over recent years, and it comes as little surprise that recent growth in the region has outpaced growth in other regions of Spain, outstripping Spain as a whole by 3.5% over the period and the sixteen countries of the Monetary Union by 18.4%. Madrid has been the Spanish region that has witnessed the greatest growth over the last twelve years, specifically 50.6%, in comparison to the national average of 41.3%. 13 MADRID ECONOMY 2010 GDP accumulated growth (%) Source: National Statistics Institute (INE) and Eurostat. The city s economy grew by 2,3 per cent in real terms in 2009 and is expected to do so in 2010 by around 0,6 per cent. In 2009, growth was 4,1 per cent across the entire Eurozone. In 2011, the forecasts point to positive growth, about one per cent in the City of Madrid. As a result of the foregoing, GDP per capita for the City of Madrid, measured both in nominal terms and in terms of purchasing power parity, is at the head of Spain. As regards purchasing power, the city stood at 75% above the Spanish average for 2009, and 80% above the average for the 27 member states of the European Union. GDP per capita (ppp) (EU-27 = 100) Source: Eurostat. Madrid figures prepared by authors. 14 3. TRANSPORTATION INFRAESTRUCTURES One of Madrid s greatest assets is its superb network of transport infrastructures, which effortlessly connect the city with regional, national and international locations, while catering to the city s own internal transport needs. As regards the latter, the Madrid Underground plays a pivotal role by covering vast areas of the city and even stretching beyond. Over the last twelve years, the underground network has expanded by nearly 250% and by 22% in the last two years alone to span a total of 284 kilometres, making it the second largest in Europe with only the London Underground lying ahead. Evolution of the Madrid Underground (length in km) Source: Statistics Institute for the Community of Madrid. Partnering the metro we have the railway network, which, boasting 369 kilometres of track among ten different lines, some of which operate as frequently as the underground, provides connections between the various areas of Madrid, and between Madrid and the rest of the region and the two neighbouring regions. Let us not forget the 115 kilometres of new line scheduled under the Commuter Railway Infrastructure Plan for Madrid. This railway network is ably supported by an impressive and ever-expanding network of city buses. The overall length of the bus network of Madrid s Municipal Transport Corporation (Empresa Municipal de Transportes, or EMT) at yearclose 2008, when 426 million passengers were transported, stood at 3,690 kilometres, marking a 31% increase over the last eight years. These routes are serviced by a growing fleet of over 2,000 vehicles, while the network as a whole is undergoing a continuous improvement process with a view to attaining the utmost standards of speed, quality and sustainability. 15 MADRID ECONOMY 2010 A key driving force behind effective transport within a city is its intermodal transfer facilities, enabling travellers to change from one means of transport to another. Madrid currently features 28 modern transfer facilities that allow travellers to change between the different modes of transport at strategic points, including each of the main entry points into the city (see map in the middle of the report). Madrid enhances its public transport network with a fully modernised and extensive road network, which not only connects the city with the rest of the region, but also with Spain and, from there on, the rest of Europe. Over the last ten years alone, the network of major roads has experienced a 44% leap to bring its combined total length to over 964 kilometres, representing 29% of an expansive 3,381-km network for the entire region. Yet one of the main pillars underpinning Madrid s connections with the rest of Spain and abroad is the high-speed rail network. Three new lines were brought into service in 2008, drastically cutting travel times with cities such as Barcelona and Malaga. This gradual process will eventually connect Madrid with the major cities on the Mediterranean routes, as well as Lisbon and Paris, to name but a few. Madrid now ranks alongside Tokyo and Paris as one of the world s three largest high-speed railway hubs. Source: Prepared by authors from AENA information. All things said, the main mode of transport linking Madrid with the international community remains its airport - Barajas. Serving as a gateway to all corners of the globe, Barajas is one of the world s largest airports with a potential capacity of 70 million passengers a year, having recently completed extension work to increase its existing worldwide connections to 222, more than 80% of which are located abroad. 16 4. RESEARCH AND TRAINING The sheer dynamism of Madrid would not be possible without a key factor lying behind the development of any economy: high quality training and research. Madrid has a large number of university students relative to its population. The various universities located throughout the city and its metropolitan area have nearly 284,000 students currently enrolled on their courses, of which 25% are reading architecture or engineering. Students enrolled with Madrid universities ( academic year) Course Public Private Total Humanities 22,673 1,299 23,972 Social Sciences And Law 128,221 15, ,833 Experimental Sciences 17, ,126 Health Sciences 16,860 11,209 28,069 Technical Studies 58,648 11,212 69,860 Total 243,573 40, ,860 Source: Department for Education of the Community of Madrid. The City of Madrid has 540 on-campus university students for every thousand people aged from 18 to 25, while the average for Spain stands at 280. The Madrid region as a whole also leads the way in Spain, with 375 students. Madrid offers a truly rich and varied selection of universities to choose from within its metropolitan area (fifteen universities, seven of which are public and eight private), all attracting a large number of non-resident students, many of whom on completing their chosen studies become part of the productive system in the city and the surrounding metropolitan area. Madrid universities Public University of Alcalá Autonomous University of Madrid Carlos III University, Madrid Complutense University of Madrid Polytechnic University of Madrid King Juan Carlos University National Distance-Learning University (UNED) Source: Department for Education of the Community of Madrid. Private Alfonso X El Sabio University Antonio de Nebrija University Camilo José Cela University European University of Madrid Francisco de Vitoria University Pontificia Comillas University San Pablo Ceu University Distance Learning University of Madrid (UDIMA) 17 MADRID ECONOMY 2010 In addition to these university establishments, Madrid plays host to a considerable number of research institutions specialising in all fields, of which we would highlight the Advanced Centre for Scientific Research (Centro Superior de Investigaciones Científicas, or CSIC), whose research focuses primarily on the fields of science and technology. State research centres and institutes based in Madrid Centre for Energy, Environmental and Technological Research (CIEMAT) Higher Council for Scientific Research (CSIC): 46 centres and institutes Spanish Institute of Oceanography (IEO) National Institute for Agrarian and Food Research and Technology (INIA) Spanish Institute for Geomining Technology (IGME) Education Research and Documentation Centre (CIDE) National Institute for Aerospace Technology (INTA) El Pardo Hydrodynamic Experience Channel (CEHIPAR) Army Engineering Laboratories (LIE) Navy Research and Development Centre (CIDA) Source: Department for Education of the Community of Madrid. Institute for Energy Diversification and Saving (IDAE) Centre for Public Works Studies and Experiments (CEDEX) National Geographical Institute (IGN) Fiscal Studies Institute (IEF) Centre for Legal Studies (CEJ) National Meteorology Institute (INM) Centre for Political and Constitutional Studies (CEPC) Centre for Sociological Research (CIS) National Centre for Oncological Research (CNIO) National Centre for Cardiovascular Research (CNIC) Carlos III Health Institute (ISCIII) National Institute for Health and Safety at Work (INSHT) Madrid is Spain s heaviest investor in R&D. The metropolitan area of Madrid channelled 3,892 million euros into R&D
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