Imagine an independent Catalan economy | Business | Economic and financial news from a German point of view | DW

The idea of ​​an independent Catalonia has been discussed for almost a century, but the events of the last fifteen weeks have dramatically placed the question at the heart of the European political and economic debate.

Tuesday’s news that Catalan President Carles Puigdemont has suspended the Autonomous Community’s declaration of independence for now, pending negotiations with the Spanish government, took part of the immediate spur of what constitutes the Spain’s most serious political and constitutional crisis since the end of the Francisco Dictatorship of Franco in 1975.

While the future remains very uncertain, what is clear is that the problem will not go away. One of the most consistent arguments for Catalan independence has been economic – supporters say Catalonia would be more than capable of going it alone, given its significant weight in the overall Spanish economy.

Yet the myriad of political dimensions of independence – whether it be the future relationship between an independent Catalonia and the EU or the future relationship with Spain – greatly complicates the economic arguments.

But putting politics aside, if Catalonia were to achieve full independence, what would the economy of a sovereign Catalonia look like based on its current size, and where would it fit in the larger European picture?

Tribute to Catalan industry

If an independent Catalonia existed within the EU, its population of 7.5 million would make it the 15th largest country in the bloc.

Based on 2016 figures, when its nominal GDP was valued at around € 211 billion ($ 249.4 billion), it would represent 1.4% of the EU’s collective GDP. This would put it in 13th place in the EU, behind Denmark and Ireland but ahead of Finland, Portugal, Greece and the Czech Republic.

Read more: Catalan separatist movement driven by more than the economy

Its GDP growth rate currently exceeds the euro area average – earlier this year the Catalan regional government predicted a GDP growth rate for the region of 2.7% for 2017, ahead of the projected GDP growth the most recent IMF for the euro area of ​​2.1%.

In terms of international trade, an independent Catalonia – based on 2016 figures – would be an important player. According to official figures from the Spanish government, Catalan exports were valued at 65 billion euros in 2016, which would rank it in the top 40 in the world and in the top 15 of EU countries.

Compared to the rest of Spain, hard hit by unemployment since the global financial crisis of 2008-2009, employment figures in Catalonia have held up rather well.

Its youth unemployment rate (for 15-24 year olds) stands at a very high rate of 34.3 percent but remains considerably lower than the overall Spanish rate of 44.4 percent. In terms of overall unemployment, the rate for Catalonia is 13.2% while the Spanish rate is 17.1%. The current EU average is 7.6 percent.

An industrial hub, a tourist gem

The Catalan economy is highly industrialized; industrial activity accounts for 21 percent of its GDP, more than Spain but slightly less than the euro area total of 25.1 percent. Its main industrial sectors are food, chemicals, automotive, energy and pharmaceuticals.

Its long-standing reputation as Spain’s industrial heart has made it a hub for foreign direct investment (FDI) – it attracted nearly € 5 billion of FDI in 2016, according to official Spanish figures.

Along with industry, tourism is a vital component of the Catalan economy and would probably be a centerpiece of the economic vision of any future independent administration. Based around the jewel of travel that is the city of Barcelona, ​​tourism represents 12% of the current Catalan GDP.

Everything except sailing

At first glance, Catalonia’s numbers seem more than to stand up to scrutiny – it already ranks as a major economy in its own right by most measures. Yet, in the end, it’s impossible to make a meaningful assessment of what an independent Catalan economy would look like without considering the deep political implications of secession from Spain.

If Catalonia somehow achieved independence, EU membership would be anything but secure, especially in the event of a complicated divorce. This would have major economic implications for the region, especially in terms of trade.

The nature of its future relationship with Spain, both politically and economically, would also be absolutely critical to its viability as a fully independent nation.

Already, the instability of recent weeks has had economic consequences. Although currently the main focus of investment in Spain, capital would quickly flee Catalonia in the event of continued instability. German business leaders have said it before, while German European Commissioner Günther Oettinger called the situation last week “very, very worrying”.

In addition to all this, there are other concerns about Catalonia’s debt level as well as other structural issues, such as its high level of youth unemployment.

Catalonia might be able to go it alone one day, but that would be anything but sailing.