A few days ago, we learned that Spanish goods exports have grown by 24.4% compared to 2021 by the end of May this year, approaching 156,000 million euros, representing a new historical maximum far beyond volume. Obtained during the same period of 2019, before the economy was hit by the tsunami that caused the health crisis. In the province of Alicante, whose production structure is different from the whole of Spain, exports of goods also grew strongly, with an annual increase of 20.6% in the same five-month period. placing ourselves at values much higher than pre-pandemic values.
While the appreciation of the dollar against the euro has had a positive impact on sales in some markets, the inflationary process that we have experienced and which also affects exports has increased the recorded figures (it is valued at prices without taking into account foreign sales). effect of general price increases). However, we should not hide that despite the headwind blowing in the international markets, as a result of the changes in the markets such as the uncertainty created by the Russian invasion of Ukraine and economic sanctions, and the blockage of some supply chains, foreign sales continue to feed economic growth with a significant force.
It is also true that the depreciation of the euro against the dollar has made some of our imports more expensive and has contributed to the rise in already very high prices of some energy products and raw materials. It remained low for months due to difficulties in reactivating international logistics networks post-pandemic and the economic repercussions of the war in Ukraine. In fact, the value of Spain’s goods imports rose 40.7% year-on-year through May 2022, reaching an all-time high. Thus, the trade deficit between January and May amounted to €26,569.7 million, a figure multiplied by six recorded in the same period of 2021.
Recently, we also learned about the indices prepared by INE to measure the development of turnover in the industry and services sector in Spain, representing the cumulative growth of 29.8% and 26.6% annually until the end of May this year. The % is adjusted for seasonal and calendar effects, respectively. While these are partial indicators, looking at the figures corresponding to the last full twelve-month period show a notable increase in activity, while also allowing us to confirm what a clear slowdown in activity has been in recent months. .
We also receive positive news from abroad. Indicators prepared by BBVA Research to measure “bottlenecks” in the transport system are starting to show clear signs of improvement in the US, not yet seen in the Eurozone, but this impact is likely to diminish. sooner or later it will be handed over to him. Additionally, the index reflecting the price of container shipping has been falling for several months since the maximum reached last fall (although it is still four times the pre-pandemic value).
In international markets, prices of various agricultural products and raw materials are beginning to accumulate very notable decreases. Steel and iron ore are already cheaper than before the pandemic. Aluminum, wood and copper have been on the decline for weeks or months and still appear to be on a clear downward path, despite being more expensive than early 2019. A similar situation is seen with soybeans, wheat or corn, which have been in decline for several weeks after rising rapidly in the first months of the year, but these are still well above pre-pandemic levels. In this context, the natural gas price remains at very high values (probably while we wait for what might happen with the Russian gas supply for the coming winter and the reactions of the main gas), which is one of the prices that shows the greatest resistance to the downside. buyers). We’ll have to see if the change in trend observed for weeks or even months in most international markets for raw materials and factors of production is part of the path we have to travel to “return.” or a less positive result: a general contraction (already discounted) in economic activity that will cause a decline in global demand for most of these products. Some indicators point in this direction: in some future financial markets, a reduction in interest rates is already expected by the Federal Reserve, as a result of the slowdown in economic activity and the subsequent fall in inflation rates. If so, we will check to what extent monetary policy can moderate price increases at minimal cost to growth and employment, and whether it can soften its own contractionary effects by reacting quickly in the opposite direction.
The European Central Bank has just joined the policy of raising interest rates, already initiated by monetary policy managers in many parts of the world, with the risk that attempts to contain inflation could worsen the financial situation and lead to a sudden stop in activity. Fragmentation of the Eurozone (the proposed mechanism to prevent this has not yet been defined with sufficient precision). Therefore, we are exposed to great uncertainty. Swords still high.