If Spain, as the saying goes, was the problem and Europe the solution, the figures for 2012 confirm that in economic terms, too, the solution is in Europe. And in other markets, too. In recent years the foreign sector has been the only bright spot in the economy. Were it not for the dynamism of exports, the recession would be much deeper than it actually is.
The current account balance — that is, the balance of operations in goods, services and transfers between Spain and the rest of the world — has now turned positive, making the foreign sector the principal asset of our economy. This is important, given that one of the chief weaknesses of the economy during the times of the real-estate bubble lay in the extraordinarily high balance of payment deficit of 10 percent of GDP.
The trade balance continues to improve, although the economic downturn in the euro zone has diminished the single-currency bloc’s ability to absorb exports. At the same time, imports are still falling — another of the components of the improvement in the trade balance — due to the weakness of domestic demand in Spain. The balance for services is also positive, thanks to the tourist industry. And in the last few months, the financial account has largely offset the disastrous flight of capital during the first part of last year.
If the foreign sector is the only one that is keeping the economy moving, it would make sense to make changes to economic policy in order to further enhance its potential, favoring in particular sectors such as agriculture and the automotive industry, which have been producing the best results in terms of overseas shipments. However, in this week’s State of the Nation debate, Prime Minister Mariano Rajoy had little to say on this subject.
For the first time in history, recent months have seen trade balances that are positive with respect to our European Union partners. The export-to-import coverage rate for merchandise trade has been producing record figures. In certain months this has been the result more of the weakness of imports than to any strength of exports, although the significant slowdown in the pace of activity in the EU in the last months of 2012 has also begun to put a drag on exports. The latter factor constitutes one more reason to question the bias toward excessive austerity in the continent’s economic policy.
The thrust of exports has gone hand in hand with the growth of international markets, which has enabled Spain to retain its quota of world trade in a climate of downturn for all the EU states, with the exception of Germany, and of an upturn for the emerging countries, another positive development.
However, the positive performance of the foreign sector is deeply indebted to the plunge in the domestic market, and to an improvement in competitiveness that proceeds excessively from the drop in wages that has taken place. This raises serious questions of sustainability for the future when, after the recession has ended, demand and wages rise again. Hence the urgent need for discussion on the need for across-the-board stimulus measures for exports.