The Spanish Economy Relies On The Export Boom To Keep Its Activity Alive

exports gorgeous

Luis Alcaide | The evolution of Spain’s export trade confirms the viability of the economy, whose rhythm is being maintained thanks to its strong export sector. Political labyrinths aside, according to the latest available data for the month of November, the increase in sales of Spanish goods to foreign markets exceeds the average increase in the EU, as well as that of the main European competitors. The number of exporters is also growing compared to the previous year, as is the trade surplus with the eurozone and EU countries. All this despite the fact that the cost of energy imports has practically doubled.

In November exports grew at a year-on-year rate of 22.28%. A record for the decade. The same is true of imports, which grew by 36.3% in the first 11 months of 2021. This is also a record for purchases from the rest of the world in the last 10 years. Rising gas and oil prices have a very direct influence on our import bill. In any case, however, discounting the price rises, purchases from the rest of the world grew at a year-on-year rate of 19% in November.

In the period January-November 2021, exports rose by 21.2% compared to the same months in 2020. Moreover, they also surpassed the highest figure of the decade and the exports realised in the first 11 pre-pandemic months of 2019. Indeed, a figure in 2021 of 288.990 billion euros compared to exports in the same months of 2019 to the tune of 268.543 billion euros. Likewise, the export-import coverage rate in 2019 of 90.3% has climbed to 93.3% in these months of 2021.

The trade deficit, the difference between the value of purchases and sales, increased in these months of 2021 by 68.7% compared to 2020. The explanation is none other than the price of energy products. Indeed, the non-energy balance with the rest of the world was in surplus. This compensation explains the improvement in the export-import coverage ratio of 93.3% compared to 90.2% recorded in the same months of 2019.
Compared to other geographical areas, the increase in Spanish exports, 21.2%, exceeded the EU-27 average of 16.6%. They also advanced faster than exports from Germany 13.8%, France 14.9% and Italy 18.4%. Only China and Japan recorded advances equivalent to those of Spain.

The EU continues to be our main market with 61.6% of our total exports. This is slightly higher than last year’s figure, ending up in a surplus of 23.265.5 billion euros (15.372 billion in 2020). The balance with non-EU countries shows a growing deficit for the sole reason of higher fuel prices.

Growth in the number of exporters
The number of regular exporters, three years in a row, grew by 18%. Companies are going global without this being a reflection of the fall in domestic activity, as confirmed by the increase in the volume of imports. Spain’s lively and competitive economy is reflected in the mirror of foreign trade.

Machinery and capital goods are at the top of the list of export sectors, with foodstuffs in second place and chemical products in third. Automotive falls to fourth place, although its sales grew by 7% versus a year earlier. Increases, on the other hand, in consumer manufactures, textiles and footwear confirm they are well received in foreign markets.

On the import side, the largest increase corresponds to energy products, although machinery and capital goods continue to occupy first place. This shows how Spanish investment is evolving, and how, in addition, imports of consumer durables and household equipment are also growing, an indicator of vigorous domestic demand.

The gloomy panorama of parliamentary disagreements, politicians’ statements and the dismal projects of part of the media do not correspond to this competitive exporting economy. Or to this demand for capital goods and machinery, as well as household equipment.

The distribution of trade shows a gigantic increase of 50% in the bill paid to the countries of the Middle East. And China, once again, is making progress as an exporter. It is now the second largest supplier alongside France, with only Germany ahead of them – can and should something be done? To the 1.2 billion Chinese, we sell half the value of the goods we invoice to Portugal.

About the Author

Luis Alcaide
Luis Alcaide works as an economist for the Spanish government since 1961. He has been state adviser in the European Union and Bank of Spain director of communications. Alcaide published editorial articles in Spain's leading newspaper El País between 1977 and 1983, and in Diario 16 between 1985 and 1988. He regularly contributes to Economía Exterior and Política Exterior. He's founder member of Grupo Consejeros.