In the first three months of 2015, the Spanish economy posted a gain in external competitiveness versus the EU, taking Consumer Price Indices as a reference, as a result of the depreciation of the Euro against the currencies of these countries and by the greater decline in Spanish prices against the average prices of other EU countries.
The major depreciation of the Euro in the first quarter of the year was the main driving force behind Spain's gain in competitiveness versus the OECD. However, competitiveness versus this area was also gained through prices, due to Spanish consumer prices contracting to a greater extent than prices in other OECD countries.
If we consider the CTI measured by Export Unit Value Indices, a gain in competitiveness versus the EU and the Eurozone was posted in the fourth quarter of the year, mainly as a result of the greater drop in Spanish export prices compared with the lower average decline in export prices of our EU partners. Competitiveness was also gained versus non-Euro EU countries, in this case caused exclusively by the depreciation of the Euro.
With regard to OECD countries, we also gained competitiveness, driven by both price and exchange rate factors.
CTI measured by CPIs: first quarter of 2015
Versus the European Union
The CTI measured against European Union countries (EU-28) fell by a year-on-year 1.7% in the first quarter of 2015 and has now accumulated six consecutive quarters of gains in competitiveness versus this area. This improvement in price competitiveness was the result of a 0.8% drop in the exchange rate index and a 0.9% drop in the relative consumer price index.
Versus Eurozone countries (EMU-19), the CTI shrank by 0.9% in the first quarter of 2015 compared with the same quarter of the previous year. This improvement in competitiveness was due to the greater decline recorded by Spanish consumer prices versus a smaller average decrease in Eurozone country prices.
The CTI measured against European Union countries not belonging to the Eurozone (EU-28 non EMU-19) fell by 4.2% in the first three months of 2015. The reason behind this gain in competitiveness was the 3.2% decline in the exchange rate index and a falling relative price index (-1%).
Versus the OECD
Between January and March 2015, Spain gained competitiveness versus OECD countries as a whole and also versus countries not belonging either to the Eurozone or the EU. This makes three consecutive quarters of gains in competitiveness.
In comparison with OECD countries as a whole, the CTI fell by 7.2% year-on-year in the first quarter of the year. This gain in competitiveness is the result of the exchange rate index falling by 5.8%, combined with a 1.5% drop in the relative price index.
The CTI versus non-Eurozone OECD countries declined considerably in this period, falling by 11.6% as a result of the depreciation of the Euro, which led to a significant decline in the exchange rate index (9.7%). Meanwhile the relative price index fell by 2%.
The CTI measured against the OECD non-EU-28 fell dramatically in the first quarter of 2015 (-13.4%). As in the other two cases, this significant gain in competitiveness was the result of a major decrease in the exchange rate index (-11.4%), boosted by the drop in the relative price index (-2.3%).
Versus the BRICS countries
In the first quarter of 2015, the CTI versus BRICS countries (Brazil, Russia, India, China and South Africa) fell significantly by a year-on-year 12.3%, the first time since 2012 that competitiveness has been gained against this area in three consecutive quarters. As in the other areas, the gain in competitiveness was due to a combination of a lower relative price index, down by 5.5%, and a falling exchange rate index (ERI) down by 7.2%, in contrast to the rising ERIs of 2013 and part of 2014).
The average inflation rate of BRICS countries has been above Spanish inflation rates since the first quarter of 2006, but the strong appreciation of the Euro versus the currencies of these countries in previous quarters made it difficult to gain competitiveness over this area.
CTI measured by UVIs: fourth quarter of 2014
Versus the European Union
The CTI measured against the European Union (EU-28) fell by 1.3% year-on-year in the fourth quarter of 2014. This gain in competitiveness was due to the simultaneous drop in the relative export price index, down by 1.1% (year-on-year rate for Spanish export prices is lower than the average year-on-year rate for the export prices of the rest of the EU-28), and in the exchange rate index, down by 0.2%.
Versus the countries making up the Eurozone (EMU-18), the CTI shrank by 1.4% in the fourth quarter of 2014. Competitiveness was gained as a result of the relative export price index falling by the same amount (-1.4%).
With regard to non-Eurozone European Union countries (EU-28 non-EMU-18), the CTI also shrank, by 0.9% in the fourth quarter of the year. This gain in competitiveness was the result of a falling exchange rate index (-1%), since the relative export price index grew by 0.2%.
In 2014 as a whole, Spain gained competitiveness (taking Unit Value Indices as a reference) versus the European Union and versus the Eurozone, largely due to the sharper decline of Spanish export prices versus the smaller average decrease in the export prices of EU and Eurozone countries. However, the gain in competitiveness driven by the exchange rate occurred in European Union countries not belonging to the Eurozone.
Versus the OECD
The CTI measured against OECD countries fell by a year-on-year 2.1% in the fourth quarter of 2014. Competitiveness was gained against this area mainly due to the negative year-on-year exchange rate index rate of 1.5%, aided by the 0.7% drop in the relative price index.
Compared with non-Eurozone countries (OECD non-EMU-18), the CTI posted a 2.6% decline in the fourth quarter of 2014. The exchange rate index dropped by 2.5% while the relative price index also fell, by 0.1%.
Finally, the CTI versus the OECD non-EU-28 fell by 3.1% in the fourth quarter of 2014. Similar behaviour could be seen in the other OECD areas; a gain in competitiveness via prices (RPI down by 0.2%) and exchange rate (ERI down by 2.9%).
From January to December 2014, Spain lost competitiveness versus OECD areas compared with 2013, as a result of the appreciation of the Euro versus the currencies of these countries in the first few months of the year, which falling Spanish export prices were unable to offset.
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