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Exporters avoid Covid and CPI by assuming part of the rise in labor costs

Date: March 29, 2024 Time: 21:25:06

The foreign sector is being a key fact sheet that explains the resilience that the Spanish economy has shown to the energy shock and the inflammation crisis aggravated by the war in Ukraine. According to the latest national accounting figures available, exports of goods increased by 2.6% in the interannual rate in the third quarter of last year, when GDP stopped dead to advance just 0.1%. At the same time, tourism is close to pre-pandemic levels, since until November the country had recovered 85% of the arrivals of international travelers and 94% of the spending they made in 2019, according to the INE Frontur survey.

In the absence of the latest data relating to the end of the year, Spain could have dismissed in 2022 its eleventh consecutive year with a surplus in the current account balance (the difference between exports, including tourism, and imports) despite the hit to the Eurozone and the rest of the large economies in recent quarters. This dynamism of the foreign sector has been a constant since 2012 and confirmed the transformation that the national economy underwent as a result of the financial crisis and the cuts and sacrifices that this entailed.

Between 2012 and 2021, the export sector increased sales of goods abroad by 40% in nominal terms, the strongest increase among the five largest economies in the Eurozone (Germany, France, Italy, the Netherlands and Spain). This would have been the case, to a large extent, thanks to the fact that the cost-competitiveness conditions of Spanish exports have remained propitious, as Ramon Xifré, associate professor and research director at ESCI-UPF points out, in an article published in the ‘ Funcas Economic Information Notebooks.

In fact, export costs have barely reached an average of 2% when compared to other economies in the region, when in the same period the unit labor costs of the Spanish economy rose by slightly more than 10%. Xifré points out that exporters have probably partially contained export costs, without transferring all the increases they have registered in order to gain or maintain their cost/price competitiveness abroad.

Taking the most recent data, those of the first three quarters of last year, as a reference, one can see how good export dynamics persist. Thus, Spain is the second economy among the five main ones in the euro with the greatest year-on-year rise in monthly exports, which were accelerating their growth month by month. Federal (the common currency even lost parity with the green bill) the sales of Spanish companies to non-EU markets grew twice as much as those made within the EU in five of the first nine months of 2022.

Neither inflation nor war have eroded competitiveness

10.8% and stood at 5.7% in December, at the moment there are no indications that price pressure can significantly harm foreign competitiveness, according to the expert who recalls, yes, that Spanish exports are still underrepresented within the bloc of the five largest economies in the euro in relation to GDP. “It cannot be affirmed that in the first three quarters of 2022 the cost-competitiveness conditions of the Spanish economy have eroded significantly,” says Xifré, adding that, up to now, the favorable domestic conditions that have partly supported the expansion of exports since 2012.

In principle, the fact that Spain has managed to register more moderate inflation rates than its partners in recent months (December was the second in a row with the lowest level in the entire Eurozone, according to Eurostat) would have helped the country to gain competitiveness; the reduction in the energy bill thanks to the ‘Iberian exception’ or cap on gas would also have contributed to this. The National Institute of Statistics (INE) publishes this Friday the first preview of the GDP for the quarter, which already presents a faithful picture of the behavior that the foreign sector clears in the whole of the year.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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