The rapid recovery of the province of Alicante following the strong impact of the outbreak of the Covid health crisis largely resulted in the good performance of exports and historic record growth rates. As a matter of fact, progress was maintained in the first half of this year, which closed with a 19.7% increase compared to the same period of the previous year. So far so good, apart from an alarming fact that also draws dark prophecies of what might happen this fall. And in June the uptrend took a sudden stop because Overseas sales fell 8%What was the first setback since the beginning of the year? Behind this situation lies strong inflation and, accordingly, the loss of competitiveness of companies and the uncertainty that exists at the international level.
The latest export data published by the Ministry of Industry, Trade and Tourism points to the first half of this year. According to the information given, foreign sales in Alicante province were at the level of 90 percent. 3,567 million eurosIt’s 19.7% higher than the same period in 2021, and more importantly, 27% higher than in the first six months of 2019 before the pandemic broke out. So progress is positive, although some worrying signs are emerging here, for example increase was lower than recorded in the entire Valencian CommunityIt closed this period with a particularly larger export increase of 24.9%, thanks to significant increases of 29% and 24.5% respectively in the provinces of Castellón and Valencia.
As a result, last month was the most stimulating figure since Alicante cut its upward trend since the beginning of the year, recording an 8% drop in foreign sales compared to May. stands at 596 million euros. In this content, most significant declines directly affect manufacturing-related sectors Like shoes, consumption is the main export activity in the province. This sector, in particular, went from selling 103.4 million euros abroad in May to staying at 89.3 million in June. Textiles also increase from 54.3 million to 47.4 in this segment. While the section including food and beverages decreased from 166 million to 143; non-ferrous metals from 39.6 to 36.2; or toys, 12.1 to 11.4. On the other hand, products such as machinery, which increased from 12 million to 14.9 million; 12.5 to 13.4 cars and motorcycles; or furniture, 10.9 to 11.1.
Paloma Taltavull, professor of Applied Economic Analysis at the University of Alicante (UA), cites several factors in explaining the reasons for these declines, although inflation is an important one. In his words, the devaluation of the euro against the dollar should in principle support exports, “but – he deserves it – the sharp increase in costs faced by companies, loss of competitiveness when marketing their products internationally. All this hurts us, and even more so when companies work with very low margins.”
Taltavul also draws attention Strong dependence of Alicante exports on traditional products. “These are – he underlines – very sensitive products to prices and international distribution chains. Any anomalies in this matter cause them more damage.”
The professor of economics points out that developments in the coming months should be followed closely, but everything “what we experienced in June may be a preview of what will happen in this scenario of war in Ukraine.
And what do the most affected sectors think? Marian Cano, president of the Valencian Footwear Entrepreneurs Association (Avecal), reminded that the exports of this sector have been a significant growth data so far, “but -the important thing- We are concerned that the continued uncertainty in the markets may lead to a decrease in consumption.“From the beginning, he adds, the decline in overseas sales in June “must be seen as an isolated figure. We’ll have to see the evolution over the coming months to assess this well and determine if this decline is the start of a change in trend.”
Pepe Serna, president of the Valencia Community Textile Entrepreneurs Association (Ateval), also agrees that we should wait for developments, but “they look tough. Companies are losing their competitiveness due to inflation” and ours is not a basic product“.