Exporters avoid Covid and inflation by assuming part of the higher labor costs

The foreign sector represents a key fact sheet explaining the resilience shown by the Spanish economy to the energy shock and Inflation crisis Exacerbated by the war in Ukraine. According to the most recent available national accounting figures, LMerchandise exports increased by 2.6% in the interim rate in the third quarter of last year, when GDP stopped dead to advance by just 0.1%. At the same time, tourism is approaching pre-pandemic levels, since the country was up until November 85% of incoming international travelers have recovered and 94% of spending in 2019, according to the INE Frontur survey.

In the absence of the latest year-end data, in 2022 Spain could have marked its 11th consecutive year with a current account surplus (the difference between exports, including tourism, and imports) despite the massive uncertainty plaguing the region. Eurozone and the rest of the major economies in recent quarters. that The dynamism of the foreign sector has remained constant since 2012 It confirms the transformation that the national economy went through as a result of the financial crisis and the reductions and sacrifices that resulted from that.

Between 2012 and 2021 the export sector Overseas merchandise sales increased 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, in no small part, thanks to the fact that the terms of cost-competitiveness for Spanish exports remained favourable, Ramon Exifry, associate professor and director of research at ESCI-UPF, points out in an article published in the Funcas Economic Information Notebooks.

fact, Export costs barely increased on average by 2% Compared to other economies in the region, when in the same period Unit labor costs in the Spanish economy increased by just over 10%. Xifré points out that the exporters may have partially contained their export costs, without diverting all the increases they recorded in order to gain or maintain cost/price competitiveness abroad.

If we take the latest data, those of the first three quarters of last year, as a reference, we can see how the good export dynamics continue. Thus, Spain is the second among the five major economies of the Eurozone with the largest year-on-year increase in monthly exports, whose growth has been accelerating month by month. in the context of where The euro fell sharply against the dollar Because of the Fed’s more aggressive rate policy (the common currency has lost parity with the dollar) Sales of Spanish companies to markets outside the European Union have doubled of those implemented within the EU in five of the first nine months of 2022.

Neither inflation nor war eroded competitiveness

In addition, despite the blow inflicted by inflation, which peaked at 10.8% in July and reached 5.7% in December, there are no indications that price pressure can significantly harm foreign competitiveness, according to the expert who remembers, yes, that Spain’s exports are still not underrepresented among the group of the five largest economies in the Eurozone in terms of GDP. “It cannot be emphasized that in the first three quarters of 2022 the conditions for the cost-competitiveness of the Spanish economy have significantly eroded,” says Xifré, adding that so far, They have maintained favorable domestic conditions that have partially supported export expansion 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 euro area, according to Eurostat) would have helped the country gain competitiveness; And the reduction in the energy bill thanks to the “Iberian exception” or the gas cap would also have contributed to this. On Friday, the National Institute of Statistics (INE) publishes the first preview of fourth-quarter GDP, which will indeed provide a faithful picture of the behavior recorded by the foreign sector in the full year.