Spain | The competitiveness of the economy

As is often the case in economics, there are multiple dimensions in which competitiveness can be measured. Some of them are included in the scoreboard of the European Commission's macroeconomic imbalances procedure. The latest available data offer both highs and lows for the Spanish economy.

Key points

• Key points:
• Spain's share of world exports has declined steadily since 2003, when it reached 2.5%, to 1.8% in 2021, but it has held up better than that of other EU countries. Despite recovering some lost ground from 2012 to 2017, from 2018 onwards it declined again and in the pandemic it did so because of the fall in tourism, the recovery of which in 2022 and 2023 should improve Spain's relative position.
• The fall in the world share of exports contrasts with the increasing trend in the share of exports in GDP, reaching 42.4% in 1Q2023, which indicates that the loss of weight of Spain's GDP in the world has been greater than that of its exports.
• Meanwhile, the current account balance has declined from a surplus of 3.2% of GDP in 2016 to 0.6% in 2022, but remained in positive territory despite higher energy and other commodity imports, and the fact that tourism had not recovered the highs reached in 2019.
• With respect to the real effective exchange rate over the last decade, its performance has been very similar to that of the large Eurozone economies. However, unit labor costs (ULC) increased 15 points from the 2016 low to 2022, more than in France and Italy, but one point less than in Germany.
• The progress experienced by some of the Spanish economy's competitiveness indicators confirms our capability to improve others in which there have been reversals, and should be an incentive to pursue policies that will help to achieve this objective.

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