Saved by exports

Since the start of the crisis, there have been two factors that have brought consistently good news for Spain's economy. The first is tourism, and the second is exports. The latest figures show that during the first half of this year, exports rose eight percent compared to the same period a year ago, while the trade deficit has come down by around two-thirds. This data should be celebrated for macroeconomic reasons, because the size of the trade deficit (roughly 10 percent of GDP) was one of the main characteristics of the recession in Spain.

But one thing is to celebrate this news, and another is to be naive about it. The data reflects not just a rise in exports, but also a fall in imports (3.9 percent compared to the previous year). The finance minister is arguing that the figures are not just a consequence of depressed demand, but also that imports are being substituted. That would be a positive symptom, but beyond the propaganda, there is no credible data to suggest that this is what is happening. The ministry is also claiming that the rise in Spain's exports is down to the increasingly competitive prices firms can offer, thanks to the government's labor reforms and the effect they have had in bringing down salary costs. But if that were the case, why would the rise in exports be greater, on average, under the previous Socialist administration? Foreign trade and internal unrest make for uneasy bedfellows.

Just as important as the macroeconomic element of this data is the microeconomic aspect. If Spain is exporting more, it's because Spanish companies are exporting more and are doing so much better, which constitutes an extraordinary achievement in the context of the battle against the recession. Above all else because it shows that at least one part of the Spanish economy can hold its own in the face of competition from medium and large companies on the global market. And they are doing so in a context of falling subsidies from the government, despite what the propaganda would have us believe.

This trend, which reflects the efforts being made by Spanish businesses to survive in the midst of a very complicated situation, by opening up new markets or consolidating their presence in others, is often reflected in companies with a domestic reach, thanks to the adoption of best practices and management styles that allow for innovation. Not that the government would know much about any of this, given its narrow commitment to campaigns promoting "Brand Spain."