Enrique Fanjul (Real Instituto Elcano) | There has been a lot written lately about the role of the foreign sector as the driver of the Spanish economy’s recovery. There have also been some very interesting academic papers published, which provide us with more details of the new configuration of Spanish exports. The exports map is changing, with non-tourism services an increasingly more important segment.
In total, despite the big recession, the German economy has grown 26% so far this century and, even more importantly, 20% from the minimums of Q1’09. It is currently experiencing one of its best moments since the “V” exit from the big crisis.
Spanish exports have seen solid growth over the past few years. Moreover the range of destinations has broadened and the products exported diversified. However, CaixaBank Research points that there is still one important issue to resolve: the complexity of exports.
Suprising as it may be, 18 of the 19 members of the Eurozone saw an increase in GDP in Q1’17 with respect to Q4’16. Spain’s GDP improved by 0.6%; Italy managed to grow (0.2%); Germany and France clocked up a 0.4% rise. Only Greece remained in the red. The unemployment rate in the region has officially fallen to 9.6%…there is growth.
There are those who believe, like Macron, that Germany’s 8.8% trade surplus is damaging the Eurozone economy. “4% could be justified; but not 8%”, says IMF head Christine Lagarde. The problem is not that Germany exports a lot, but that it imports very little.
Of its total exports, Spain only sells 5% of high-technology products overseas, or 1.65% of GDP. The country needs to boost investment in high-tech goods and services.
The latest figures have again confirmed what we have been seeing in the last few quarters: Spain is not only not losing industry at the moment, but in fact this is recovering very fast. In January, for example, Spanish industry’s revenues rose 13.1% from a year earlier, the biggest increase since April 2008.
Spain can’t imitate Germany in a context in which Europe is a closed zone where countries export to each other. And Spain is unlikely to become another Germany because the Spanish production model is still based on low productivity.
Spain’s trade deficit declined 22.4% to 18.754 billion euros in 2016, the second smallest figure since 1997, thanks to record exports.
“…One of the reasons for the high level of youth unemployment in Spain has to do with the fact that companies hardly get involved in the dual training system,” explains Hermann Simon the chairman of Simon-Kucher, the preferred consultancy firm of the “hidden champions,” those German mid-cap companies which compete globally. “Spain’s level of innovation is very weak…the whole country cannot live just off tourism services.”