Spain Export Push Sparks Trade Deficit Drop

Spain Export Push Sparks Trade Deficit Drop

Spain Export Push Sparks Trade Deficit Drop

As Spain’s economic growth continues to outpace that of its three main eurozone partners – Germany, France and Italy – exports are expanding and producing a welcome shift in the country’s trade balance.

In the five months to May, the trade deficit declined 9.3 percent to 9.434 billion euros from a year earlier, according to Economy Ministry data released last month.

Aided by the euro depreciation and Spanish firms’ increasing competitiveness, exports grew 4.3 percent to 102.916 billion euros, the highest figure since 1971 for the January-May period.

Imports, on the other hand, declined 3 percent to 112.350 billion euros year-on-year.

After the intense growth registered in 2014, imports had been forecast to moderate slightly this year.

Another external factor helping Spain’s trade balance has been the drop in oil prices. This led to a decline of 34 percent in the energy deficit in the five months to May. Imports of energy products also eased, dropping 31.5 percent.

In 2014, the eurozone’s fourth biggest economy saw the shortfall of exports to imports grow by 53.4 percent to 24.47 billion euros.

 

AUTOS DRIVE EXPORT GROWTH

Spain’s labour costs have fallen by about 13 percent relative to German ones since the crisis began to bite in 2009.

The automobile industry has benefited from this, so it is not surprising that international car manufacturers like Volkswagen  have been keen to boost capacity at their Spanish plants.

And with almost 90 percent of the cars made in Spain destined for  export, the knock-on effect has been significant.

In the five months to May, exports of cars and trucks rose 18.4 percent year-on-year, accounting for just over 17 percent of total exports.

Exports of food like Iberian ham, as well as manufactured goods, also put in a strong showing over the period.

 

KEY MARKETS SHOW ROBUST DEMAND

The outlook for exports for the rest of 2015 is positive, with export growth expected to accelerate due to continued improvements in price competitiveness and the forecast recovery in Spain’s main exports markets.

The country’s biggest trade partners are Germany and France. Exports to the European Union accounted for 64.9 percent in the five months to May, up from 63.7 percent a year earlier, with sales to Germany up 5.3 percent and France up 4 percent. Exports to Italy rose 12.6 percent.

The sustainability of the eurozone recovery will be key to guaranteeing that Spain’s export industry remains robust.

The latest PMI data released by financial information services provider Markit showed the rate of expansion in eurozone economic activity slowed slightly at the start of the third quarter, however growth remained close to June’s four-year high.

Increased demand from non-EU countries like the Middle East and Canada will also ensure the popularity of “Made in Spain” products.

For information on Spain’s trade balance, contact corporate law firm Argali Abogados.

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