La competitividad de la madre patria

 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?

Spain losing competitiveness (Spanish numbers first):
 — beverages:   3.4% versus  -1.0%
 — textiles:       3.5% versus   2.0%
 — paper:        15.8% versus   7.0%
 — chemicals:    8.8% versus   5.0%
 — metals:       22.8% versus 20.0%

Spain treading water:
 — pharmaceuticals:      0.9% versus 0.5% 
 — non-metal products:  1.7% versus 2.0% 
 — electrical equip.:       2.0% versus 1.5% 
 — machinery:               1.1% versus 1.0% 
 — furniture:                 1.3% versus 1.5% 

Spain gaining :
 — cars:      -0.7% versus 2.0%
 — food:       3.5% versus 9.0% 

Comments

[David Allen]

Off topic, but congratulations on getting the book published!