Catalonia is a key contributor to the Spanish economy

Investors focused on Scotland last year, fearing that a potential UK exit could disrupt the global economy. Those same eyes turned more recently to Spain after a vote in Catalonia gave separatist parties a majority of regional parliamentary seats.

Many in Spain’s northeast region have called for political independence, but the September 27 vote appears to have temporarily halted the movement: the popular vote – and therefore the political “mandate” – for breakaway parties does not reached only about 48%, and the national government in Madrid is resolutely opposed to the separation. Southern European bond yields hit their lowest level in five months on Monday as investors viewed recent national elections in Portugal and Spain as signs of growing stability in the region.

Yet independence sentiment remains strong in Catalonia, which has its own language and still remembers brutal oppression under former Spanish dictator Francisco Franco. And if Catalonia were to declare independence, it would take much of Spain’s economic might with it.

In a research note after the vote, JPMorgan predicted that “the conflict between Catalonia and the central government will not wane in intensity. … In our view, a material offer to reframe Catalonia’s role within the ‘national state…is needed to mitigate the rise of radicalism in the pro-secession camp and restore the premises of a more constructive approach.’

Catalonia’s regional product in 2013 was 203.62 billion euros ($228 billion), according to the Public Diplomacy Council of Catalonia, or about 20% of Spain’s 2013 GDP of $1.04 trillion. ($1.17 trillion).

Scotland, meanwhile, accounted for less than 8% of the UK’s total GDP in 2013, according to the European Commission. Scotland had just over 8% of the UK population in 2012.

Although it only accounts for around 16% of Spain’s population, Catalonia accounts for around 25% of all Spanish exports and 23% of all Spanish industry, according to the regional government. Catalonia’s economy is relatively diversified, although around half of employment comes from manufacturing jobs or market-related production services, according to figures from the Organization for Economic Co-operation and Development.

The effect of a Catalonia exit on Spain varies widely depending on how much debt it would entail, said Xavier Sala-i-Martin, Catalan-born chief economic adviser for the Center for Competitiveness and Global Performance of the World Economic Forum.

If Madrid were to negotiate for an independent Catalonia to take on 19% of its debt – the same proportion the region had contributed to GDP – then the effect would be largely a washout for Spain’s macroeconomic position. Catalonia has not historically grown so much faster than other parts of the country that its exit would hurt future expectations of economic expansion, Sala-i-Martin said.

But if debt reallocation were to match the figure of 16% of the population or the 11% of current national spending in the region, Spain’s debt-to-GDP ratio could approach unsustainable. It’s just under 100% now, and some are already wondering how Madrid will be able to meet its payouts if rates were to rise (an expected global outcome if the Federal Reserve decides to tighten in the US).

It would be even worse for Spain if the national government tried to actively oppose a Catalonia that declares independence and therefore refuses to enter into a debt transfer agreement, Sala-i-Martin said. If so, then its debt-to-GDP ratio would swell to something near 125%, he said.

“With the disappearance of the richest region and an almost unsustainable debt, Spain is in great difficulty,” said the economist.

– CNBC’s Seema Mody contributed to this report.