The foreign trade competitiveness of the Spanish economy in the third quarter of 2014, taking the Consumer Price Indices as a reference, increased vis-à-vis the EU due to lower Spanish inflation compared with the average rate of inflation in the other EU countries and the depreciation of the Euro against the currencies of those countries.
Spain gained competitiveness over the OECD due to a slower increase in Spanish prices compared with the moderate average inflation in the other OECD countries and the slight appreciation of the Euro in the third quarter.
When considering the CTI calculated using the Export Unit Value (UVI) in the second quarter of 2014, a gain in competitiveness was posted vis-à-vis the EU and the Eurozone as a result of the greater downturn posted by Spanish export prices compared with the lower average downturn in export prices from the EU countries, in spite of the appreciation by the Euro.
Versus the EU countries with whom we do not share a currency and versus the OECD, there was a loss of competitiveness. Appreciation of the Euro had a negative influence in both cases (to a greater extent with regard to the OECD countries), as did the loss of price competitiveness.
CTI calculated with CPI: third quarter of 2014
Compared with the European Union
Compared with European Union countries (EU-28), the CTI fell by 1.2% year-on-year in the third quarter of 2014. This is the fourth consecutive quarter that the comparative rate has been negative. This gain in competitiveness can be explained by a fall in both the consumer relative price index of 0.9% and the exchange rate index of 0.3%.
Compared with the Eurozone (EMU-18), the CTI also fell by 0.9% in the third quarter of 2014 on the same quarter of the previous year, as did the consumer relative price index.
Compared with non-Eurozone European Union countries (non-EMU-18 EU-28), the CTI fell by 2.1% in the third quarter of 2014 (it fell by 1.6% in the previous quarter). This gain in competitiveness can be explained by the simultaneous fall in the consumer relative price index of 1.1% and the exchange rate index of 1% (the first quarter in which a certain depreciation of the Euro has been seen since the end of 2012).
In the first nine months of 2014, Spain gained competitiveness when compared with these three regions due to the low inflation when compared with the average rate of inflation posted by the countries of the three regions.
Compared with the OECD
In the third quarter of 2014, a competitiveness increase was also posted versus the OECD countries, as well as versus those countries belonging to neither the Eurozone nor the EU. This was also the first quarter in which there was a gain in competitiveness versus these regions since the end of 2012.
Hence, the CTI against the OECD fell by 1.4% year-on-year. This gain in competitiveness was the result of a 1.8% drop in the relative price index given that the exchange rate index rose slightly in this period (0.3%).
Versus the non-EMU-18 OECD countries, the CTI fell by 1.9% in the third quarter of 2014 due to the weak appreciation of the Euro in this period (compared with the significant appreciation in the first two quarters of the year), which was reflected in an increase in the exchange rate index of 0.5% and a fall of 2.4% in the relative price index.
When compared with the non-EU-28 OECD countries, the CTI fell by 1.8% year-on-year in the third quarter of 2014. As was the case in the previous regions, this gain in competitiveness was mainly a result of the decrease in the relative price index of 2.7%, while the exchange rate index rose by 1%.
The slow-down in Euro appreciation in the third quarter enabled a gain in competitiveness in these regions, where Spain has been price competitive in the last four quarters. However, Spain lost competitiveness against them in January-September 2014, mainly due to the appreciation of the Euro.
Compared with BRICS countries
The CTI calculated vis-à-vis the BRICS countries fell by 2.1% year-on-year in the third quarter of 2014, the first negative rate since the second quarter of 2013. This gain in competitiveness was caused by the reduction in the relative price index of 4.1% (reduction of 3.6% in the second quarter) compared with an increase in the exchange rate index of 2.1% (strong increase of 9.3% in the second quarter).
The average rate of inflation in the BRICS countries has been higher than Spanish inflation since the fourth quarter of 2006, but the strong appreciation of the Euro against the currencies of these countries in previous quarters has prevented a gain in competitiveness when compared with this region. For this reason, in spite of the increased competitiveness this quarter, there was an overall loss of competitiveness in the period January-September when compared with the BRICS countries, a loss that can be explained by the appreciation of the Euro vis-à-vis the same period in 2013.
CTI calculated with UVI: second quarter 2014
Compared with the European Union
Compared with the European Union (EU-28), the CTI decreased by 0.1% year-on-year in the second quarter of 2014. This gain in competitiveness was caused by a 0.3% drop in the relative export price index (the year-on-year rate of Spanish export prices is lower than the average year-on-year rate for export prices from the other EU-28 countries), while the exchange rate index rose by 0.2%.
The CTI calculated against the Eurozone (EMU-18) fell by 0.4% in the second quarter of 2014. This gain in competitiveness was due to the relative export price index decreasing by the same amount.
Compared with European Union countries not belonging to the Eurozone (non-EMU-18 EU-28), the CTI increased by 0.2% in the second quarter of the year. The exchange rate index and the relative export price index rose by 0.1% and 0.2%, respectively, leading to a loss of competitiveness against this region.
The gain in competitiveness against the EU and the Eurozone was caused by the greater increase in Spanish export prices when compared with the average year-on-year variation in export prices from these countries, given that the Euro appreciated in the second quarter against the EU countries. In the first six months of the year however, there was a loss of competitiveness against the EU in terms of both price and the exchange rate.
Compared with the OECD
Compared with the OECD countries, the CTI rose by 3.3% year-on-year in the second quarter of 2014. This loss of competitiveness was due to the exchange rate index rising by 2.8%, amplified by the 0.5% increase in the relative export price index.
Compared with countries not belonging to the Eurozone (non-EMU-18 OECD), the CTI posted an increase of 6.1% in the second quarter of 2014. The exchange rate index rose by 4.9%, as did the relative price index by 1.2%.
Finally, compared with non-EU-28 OECD countries, the CTI increased by 7.8% in the second quarter of 2014. The same performance was seen as in the other regions of the OECD; both the exchange rate index and the relative export price index rose by 6.2% and 1.5%, respectively.
As for the OECD, the loss of competitiveness versus all these regions was caused by both a strong appreciation of the Euro and a loss of price competitiveness, given that the increase in Spanish export prices was greater than the average year-on-year variation in export prices from these countries.
In the first six months of 2014, Spain lost competitiveness against the OECD when compared with the same period last year, mainly due to the appreciation of the Euro against the currencies of these countries.
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