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Economy: Spain in the face of deglobalization | Business

Spanish exports grew by almost 24% in the first quarter.
Spanish exports grew by almost 24% in the first quarter.Europe Press (Europa Press)

One of the surprises of the post-pandemic recovery, which does not seem to be denied since the invasion of Ukraine, is the dynamism of exports. It was feared that the disorganization of production chains, together with the energy crisis, would reduce industrial potential, both due to the multiplication of delays in the arrival of supplies and the risk of losing competitiveness. It is a fact that production prices are becoming more expensive at a devilish rate that takes us back several decades (the indicator of non-energy industrial prices for the month of April increased by almost 16%, the highest rate since 1980), and the availability of supplies is a headache for companies (the PMI indicator for supply delays was at worrying levels in April).

However, sales abroad show a boom that resists the ravages of the war. During the first quarter they grew by almost 24% compared to the same period in 2021, and are already 14% above the values ​​of the pre-Covid era. These results clearly improve the European average (with rates of 20% and 11%, respectively). Of the four major economies, Spain is the one that has made the most progress in terms of market share abroad. And the information available for the month of March does not alter the trend despite the war context and its derivatives.

Exports of non-tourist services also evolve favorably, while foreign tourism is back. All in all, the pull from the foreign sector is offsetting the weakness in domestic demand, weighed down by the drop in household purchasing power caused by inflation and the geopolitical uncertainties that cloud the investment horizon. As a result, the economy still grew in the first quarter while others, such as Germany, are gripped by recession.

This providential tailwind could be reflecting a change in the globalization process: European companies seek greater security in value chains, and therefore are rethinking the framework of relationships with their suppliers. Another crucial factor is the rise in the cost of international transport, both due to the disruption of logistics systems (aggravated in recent times by the near closure of some of the main ports in eastern China) and the scale of energy prices. The natural result is an approach of production to places of consumption.

Proof of this, exchanges between EU countries are in full expansion while trade with the rest of the world is stagnant, showing a certain “deglobalization”. At the moment, Spain is benefiting from the change in the pattern of production processes, increasing its presence in the European market. Sales to other member countries are progressing at a high rate, bringing the balance with the eurozone to a surplus of 9.1 billion euros, compared to 5.4 billion a year ago (data for the first quarter).

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It remains to be seen if this shift, with obvious benefits in terms of growth, will continue over time and if it serves to improve our production model. Productivity has barely advanced for decades while, discounting inflation, the average remuneration per employee is at similar levels at the beginning of the century. The automotive sector, the main exception to the current export boom, will be a barometer of the change in model: this industry is one of the most exposed to the double technological and energy transition.

Undoubtedly, the Recovery Plan hits the right keys to make the qualitative leap, with planned investments in the development of electric vehicles, the agri-food chain, renewable energies or semiconductors. But today it does not seem that the projects are being executed at a sufficient pace or with the necessary coherence to take advantage of the opportunity.

Remuneration

According to the latest forecasts of the European Commission, the average remuneration per employee will fall this year by 2.8% in real terms (discounting the evolution of the private consumption deflator). This would be the largest cut in purchasing power since 2012 (-3.4%). The Commission also anticipates that inflation will generate a decrease in average remuneration in real terms in all member countries without exception. This movement in unison across the European Union is unprecedented since comparable data has been available, in the mid-1990s.

Raymond Torres he is director of the situation at Funcas. On Twitter: @RaymondTorres_

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