How Geopolitical Tensions in the Middle East Affect Spain’s Economy: Challenges and Opportunities for Small and Medium-Sized Businesses

Geopolitical tensions in the Middle East are exacerbating war and causing dramatic consequences for the population, which is also starting to have surprising impacts on the Spanish economy. The uncertainty in the region is undermining confidence, making it difficult for investments to take off, which is crucial for the country’s expansion. Despite these challenges, Spain is attracting significant international investment due to its low labor and energy costs compared to other economies in the region.

However, this disparity between international and local investors highlights the need for economic policies that support small and medium-sized businesses in Spain. Initiatives like the co-financing project by Cofides aim to provide resources to strategic sectors and support intermediate-sized companies. However, more decisive actions, such as financial union at the European level, may be needed to stimulate investment among smaller businesses.

The investment deficit in Spain, particularly among smaller companies, calls for a medium-term budgetary plan to unlock funding for these businesses. While larger corporations continue to attract foreign capital, smaller businesses are struggling to access financing and navigate uncertainties in the market. The global environment’s volatility poses challenges for Spanish SMEs, especially as conflicts in the Middle East persist and potentially escalate.

Despite these challenges, foreign direct investment in Spanish companies remains strong, with investors from the EU, US, and UK contributing the most funds. The presence of other investors, such as Gulf monarchies and China