Trade figures for 2004 show that the Spanish economy remains uncompetitive. The Industry Ministry has just announced that the country has lost a further 4.4 competitiveness points - a measure based on prices, production costs, innovation and the ability to open new markets. Based on market prices, Spain's ability to compete is about 12 points behind its European Union neighbors. Analysts say that in a country with little difference between products, a lack of competitiveness will soon take its toll.
Nevertheless, some experts say that retail prices should not be the only reflection of competitiveness, and that labor costs must also be included in the assessment. But while these prices are not the only measure, and probably not the most accurate, what is important is the unarguable trend that Spain seems unable to improve its competitiveness overall.
A number of contradictions are evident. Internal demand, for example, conflicts with the rest of the euro-zone, rising by 4.6 percent, while the gross domestic product decreased two points thanks to poor export figures.
"On one hand, the Spanish economy is doing fine, with growth figures above the EU average. But if you look at trade figures, then things change," said Enrique Lama-Noriega, who heads the economy department of the CEOE employers' federation.
Juan José de Lucio, however, who heads the research department of the Chamber of Commerce, does not believe in using prices to measure competitiveness. Instead he stressed the need to add value to goods and to look for new markets.
The Bank of Spain has been warning of a decline in competitiveness in recent years, and also such a decline's effect on exports, pointing to commercial specialization and changes in world demand as more influential factors. The central bank said that the country's reduced share of global exports is largely due to the loss in competitiveness in mid-level technology.
But other experts have said that the decline of the export sector cannot be blamed entirely on the particularities of Spanish products. Weak international demand for overseas products, combined with strong internal demand here will naturally create an imbalance, they said. Beyond Europe, Spanish products are made more expensive by the strength of the euro. About 40 percent of Spanish goods are exported beyond the euro-zone.
"We have been losing our share of world trade since 1999," said Manuel Balmaseda, head of BBVA's research department. "And yet it should be growing faster than the other euro-zone countries."
He recommends greater liberalization of the economy, combined with a more rigorous fiscal policy. The CEOE agrees, and is also calling for greater public support for Spanish exporters. Balmaseda said that Spanish firms have been relatively innovative, but that greater investment in research and development is needed.
