Spain Nears Trade Equilibrium

España roza el equilibrio comercial
Flickr/Fer Figheras

Well, equilibrium is a bit exaggerated. In May, Spain’s trade balance accumulated over 12 months – my favorite way of looking at this data for seasonality – registered a deficit of about 20.5 billion euros, which is equal to roughly 2 percent of the GDP.

The data improved by slightly more than 2 billion euros in April, due to an increase in the non-energy trade surplus of about 1.074 billion euros, along with a reduction in the energy deficit of about 824 million.

Is this behavior sustainable? Theoretically, yes. Although fluctuating slightly, Spain’s trade balance has been improving continually since May 2008, when it came close to a dizzying 13 percent of GDP. This behavior is typical of economies in recession, and even more so in those that are experiencing a recession as profound and far-reaching as Spain’s.

Improvement in the trade balance is an inevitable consequence of a contraction in consumption, which reduces imports. But it also proves that Spanish companies have identified how to find customers in foreign markets, which is particularly commendable if we consider that the recession has affected virtually the entire eurozone. In addition, this strong trend keeps hope alive that Spain’s GDP will start growing once again, albeit timidly, in the final quarter of this year.

About Javier Diaz-Gimenez

Prof. Díaz-Giménez has dedicated most of his professional life to doing research and teaching macroeconomics. His recent work explores the macroeconomic consequences of fiscal policy and pension system reforms. He has published the results of his research in some of the leading professional journals such as the Journal of Political Economy and the Journal of Monetary Economics. He is also the author of the undergraduate textbook Macroeconomía: Primeros Conceptos (Macroeconomics: Primary Concepts).

One thought on “Spain Nears Trade Equilibrium

  1. Spain needs to learn fiscal discipline coz the PIGS (Portugal. Ireland, Greece & Spain) caused a ripple effect on the EU that almost led to the collapse of the EU

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