Spain registered a surplus of EUR 1.7 billion in its current account in October, a sixth consecutive monthly surplus. The country suffered structural current account deficits for several years, but 2012 and 2013 have seen a sharp improvement in foreign trade. The year-to-date surplus in the current account balance of 4.2 bn is a noticeable improvement on 2012 when the year-to-date current account balance recorded a deficit of roughly 15 bn; and in 2011 the deficit was 32 bn.
“There seems to be cyclical annual pattern in the monthly balances, with a downswing, followed by a bottoming-out in November. The notable exception to this pattern was 2012, when the surplus started rallying after a September low. That was right after ECB president Mario Draghi promised to do “whatever it takes”, and yield-hungry investors were buying into Spanish assets to pick up yield. I am expecting disappointing numbers today and perhaps for one more month, before it is time for the cyclical positive surprises,” writes Juhani Huopainen, blogger at Trading Floor.
The causes for this turnaround are the improvement of competitiveness of Spanish companies (as a result of the reduction of wages and the productivity increase), as well as the decline of consumption for goods, including imports, due to the crisis. Since the peak in 2008 unit labour costs have declined by almost 18 percent according to the ECB’s competitiveness barometer.