• Recovery Spain breaks historical record for exports in 2021: 229,963 million euros

After three consecutive years of growth and contribution to the Gross Domestic Product (GDP), the foreign sector is beginning to show signs of weakness, especially in the sale of goods abroad, and experts already expect that its contribution to Spain's economic growth next year will be zero or even negative.

Exports of goods have fallen by 3.7% year-on-year in volume - the amount sold - in the first eight months of the year, according to data from the Ministry of Industry, Trade and Tourism published on Thursday based on Customs information updated through August. The general rise in prices, however, has allowed the country to invoice 1.8% more for sales to other countries, since although we have sold less, we have sold it at a higher price. The decline is not only due to weak demand, but also to the fall in the base of exporting companies, as there has been a decline in the number of companies exporting sporadically due to the feeling of insecurity and inflation.

The automotive sector (vehicles and components) is the one that best resists uncertainty and the fall in international demand, with sales in monetary terms increasing by 27.9% year-on-year; while exports of capital goods have risen by 11.8% - with a special rebound in the sale of transport material; and food, beverages and tobacco have been exported 5.7% more - in this group sales of all products increased, except oils and fats, whose sales have fallen by 8.1% due to their exorbitant rise in prices.

They are the only three groups that keep Spanish exports afloat, since so far this year we have sold fewer energy products (-22.4%), raw materials (-17.6%), non-chemical semi-invoices (-11.1%), consumer durables (-0.6%) and consumer manufactures (-0.4%). In these last two groups, the fall in sales of household appliances (-8.3%) and clothing (-6.7%) stands out.

By geographical area, sales to the European Union are holding up (they are 3.3% higher so far this year) despite the economic slowdown that the continent is experiencing and it is striking that despite the technical recession in Germany during the last quarter of 2022 and the first quarter of 2023, exports to that country have been 11.7% higher than last year and in August they were still at growing ground. Sales to the rest of Europe (+8.9%) and to Latin America (+16.8%) also remained positive, while sales to North America (-2.3%) and, above all, Asia and Africa (-7.1% and -7.8%, respectively) also remained positive.

The fall in exports of goods so far this year has been partially offset by the pull of exports of services, both tourism and other types of services: transport, logistics, telecommunications, consultancy, patent and trademark services, repair, maintenance, health, financial, etc. The evolution of these sales abroad is reflected in the Bank of Spain's trade balance data, which are published quarterly.

According to the latest update, for the second quarter, tourism revenues (what foreign tourists spend in Spain) rose by 25.2% in the first half of the year to 35,643 million euros, due to the recovery of international travellers, the increase in overnight stays and the rise in prices. On the other hand, exports of non-tourism services (services offered by Spanish companies and contracted by non-residents) have increased by 14.2%, to 46,677 million euros in the first half of the year.

"Non-tourism services have more capacity to incorporate margins than industry, due to competition and by their very nature. The indicators that we have, with all caution, indicate that they have gone quite well, contributing positively and to a certain extent counteracting the deterioration of trade in the balance of payments. To this day, there is a decoupled behavior between the two types, although sooner or later they may be affected," Raúl Mínguez, director of the research service of the Spanish Chamber of Commerce, doctor in economics and specialist in foreign trade, explains to EL MUNDO.

Zero or slightly negative contribution

This expert warns that if the drift in exports of goods "were to spread to that of services, not because of a fall but because of less dynamism, foreign trade could have a slightly negative contribution to economic growth next year."

The Spanish Chamber of Commerce will update its growth forecasts at the beginning of November and Mínguez already points out that the contribution of foreign trade for this year will be revised downwards, but that it will be offset by the good performance of domestic demand. For 2024, however, it warns that it will have "a zero contribution", or even slightly negative, so "it will not have the prominence it has had in other times, which is a weakness for the Spanish economy", since a healthy growth pattern is one that is supported by both domestic and external demand.

Funcas agrees with this forecast, warning on Thursday that "the slowdown will be more clearly evident in 2024, due to the carry-over effect of the last part of this year, and the lower impulse of some of the current growth factors: the normalisation of tourism and the agreements to recover the purchasing power of wages, with its corollary in terms of household disposable income and private consumption (...) GDP will grow by 1.5% and growth will come mainly from domestic demand, while the contribution from the foreign sector will be zero."

In recent years, exports have been key to underpinning the recovery from the pandemic and, in particular, services exports. "Spanish exports increased by 12.9% from the fourth quarter of 2019 to the first quarter of 2023. The share of exports in GDP in real terms has increased from 34.5% to 39% (in nominal terms from 34% to 42.4%). When comparing the evolution of Spanish exports (+12.9%) with those of the Eurozone (9%), the main difference is found in the increase in sales of services abroad (+33.9% compared to +10.1%), as those of goods have performed moderately worse (5.4% compared to 8.1%). In real terms, goods have gone from 23.7% of GDP to 25%, while services have gone from 10.8% to 14.5%," BBVA Research said in a report on foreign trade published in June.

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  • European Union
  • Inflation
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