Spain in the face of the reconfiguration of global exchanges

The metamorphosis of the globalization process is increasingly palpable, given the distancing that is taking place between the large trading blocs, exacerbated by the double pandemic and energy crisis. In the presentation of its latest economic outlook report, the OECD notes that obstacles to international trade have multiplied by 10 in the last five years (in terms of the percentage of import products subject to some type of restriction between 2010 and 2022). . One of the most symbolic trade barriers of the new times is the Biden plan of massive support for American industry, something unimaginable at the time, de facto extinct, of the so-called “Washington consensus”.

The change in course is being especially detrimental for Europe, as evidenced by the sharp deterioration in the balance of its exchanges with China and the US. The deficit with the Asian giant has multiplied by almost 3 in relation to the pre-pandemic average (in concept current account balance of the European Union). And the surplus against the US is in the process of volatilizing, dividing by 4 during the same period.

In Spain the trend is similar to the rest of the EU. And, more worrisome, the imbalance reveals a growing dependency on key products for the digital and green transition. It is obvious that the European objective of strategic autonomy is not materializing for the moment in concrete economic advances.

However, “deglobalization” also entails a reconfiguration of production chains, which in this case could be positive for the Spanish economy. Companies have become aware of the vulnerability of outsourcing processes that are excessively fragmented or dependent on countries far from the large centers of consumption. This vulnerability has resulted in the appearance of bottlenecks and a situation of scarcity of essential supplies, generating a relocation of productive activity to closer and safer places, as also confirmed by the OECD report.

It is likely that Spain is benefiting from this shortening of supply chains, to the point of nullifying the negative impact of the trade shock with the US and China: trade between Spain and the rest of the EU shows a growing surplus, almost compensating for complete deterioration registered with the great powers. So that the total balance continues to be in surplus, when two out of three European countries, including France, Italy and export models such as Belgium and Finland, are in the red. Likewise, the industrial locomotives that are Germany, Austria and the Netherlands have drastically reduced their surplus.

Although it is not easy to quantify it, it is likely that the improvement in our exchanges with the EU reflects to some extent the relocation process. Its effects are palpable in sectors such as the pharmaceutical industry and professional services, for example. The pull in tourism is undoubtedly another factor in the good performance of the foreign sector, but this only partially explains the overall result: among the Mediterranean countries, Spain stands out as the only one with a surplus abroad.

All this points to a plus in the competitiveness of the Spanish economy in terms of production costs, especially labor and energy, and relative social peace underpinned by the recently concluded wage agreement. This is a powerful tailwind today, but one that will subside if the causes inherent in the growing imbalance in trade with the countries that are leading technological change are not corrected. From this point of view, the addendum to European funds, with additional (non-reimbursable) transfers of 10,300 million euros and loans of up to 84,000 million to be executed until 2031, touches the right keys. But to build on the momentum, persistent implementation problems that have hampered the program’s transformative potential will have to be addressed.

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