Edward Hugh brought my attention to the strange fact that Spanish export prices have risen 5.4 % in the past year, versus 4.3 % in Germany. This is not what should be happening in the middle of a brutal recession! Spanish costs should be falling, not rising. At the very least, they should be falling relative to booming export economies, like Germany.
But then Detlef Guertler dug up some more detailed figures, which told a more nuanced story. Spanish export prices were rising faster than German ones in beverages, textiles, paper, chemicals, metals and metal products, pharmaceuticals, non-metal products, electrical equipment, machinery and furniture. The only places Spain was gaining was in food and cars. In food, Spanish prices rose 3.5% versus 9.0% in Germany, and in cars Spanish prices fell 0.7% while they rose 2.0% in Deutscheland.
It sounds grim, but I would venture that these numbers tell a positive story. Spain’s overall trade deficit didn’t budge last year — from €50.2 billion to €52.4 billion, for a small rise of €2.2 billion — but its trade surplus in food rose by €1.0 billion and its surplus in cars rose by €3.1 billion. (In percentage terms, the surplus in food rose 13% and the surplus in cars rose 48%.) That was not enough to offset a deterioration in the country’s energy trade balance of €7.5 billion, but that was driven by a big run-up in energy prices that hopefully won’t be continued.
In short, Spain seems to be gaining competitiveness where it has a comparative advantage. As long as its imports of the stuff in which it does not have a comparative advantage refrain from rising as quickly (which is what has been happening) then there is a positive chance that the country will be able to pull out of its slump into a cars-and-food driven recovery. (Plus, of course, tourism, which was not in these statistics.)
Or I could be wrong. Edward?