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Trade deficit increasing at slower rate
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Trade deficit growing at rate of 7% due to energy balance.
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In the period January-November 2007, the trade deficit was 89.12 billion euros. This means that, following the rise in August, in cumulative terms for January-November, the trade deficit grew by 7.0% year-on-year as against 7.9% year-on-year reported between January and October and would support a tendency to slowdown. The export-import rate stood at 65.2 in the first eleven months of the year, one decimal above the same period in 2006.
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From the beginning of the year the slowing down of the increase in the deficit was mainly due to the easing of the energy balance in the trade balance. In recent months the improvement in the energy balance has lost some strength while the non-energy balance showed a rise that was interrupted in November. Immediate prospects are not overly bright as it is possible that the imbalance in the energy balance may again increase.
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In more general terms, it should be pointed out that in the period January-November exports grew by 7.7% year-on-year while imports were up 7.4%. The trade deficit thus rose by 7.0%, the lowest growth since 2003. In real terms, the gap between exports and imports continues, given that, while the former grew by 4.8% year-on-year, purchases abroad were up 7.4%.
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In November, the most dynamic groups of products exported were energy goods which, in spite of representing 5.2% of exports, doubled their figure compared with the same period the year before. Sectors of greater weight such as food and capital goods reported advances of 15% while the chemicals sector improved by 13.0%. Energy imports also showed strong with an increase of 18.2% because of the increase in the price of oil. Consumer goods and food also reported important increases.
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Trade with countries outside European Union shows strongest growth.
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Finally, the performance in foreign markets continues to follow recent trends. The European Union (EU) remains the reference trading partner for Spain’s economy, representing as it does the destination of 69% of the country’s exports and the origin of 60% of Spain’s purchases abroad. Nevertheless, exports to Asia showed great drive with growth of 35.2% while those to Africa were up 26.5%. Also showing strong growth were exports to Turkey (47.5%), Russia (40.9%) and Norway (29.9%). Imports from North America and Asia rose by 8.8% and 8.7% respectively.
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Balance of payments: incomes deficit reaches high levels
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Trade deficit eases and worsening of current account deficit slows down.
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The current account balance recorded a deficit of 9.77 billion euros in October, a figure 29.6% higher than one year earlier. The widening of the current account imbalance was due, in practically equal measure, to the increased deficits in the transfers balance and the trade balance which again contributed to the negative balance following the turn-around in August. The increase in the deficit in the incomes balance was also substantial but less than in previous months.
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In order to evaluate these results over a longer time-frame it would be useful to show the trend in cumulative figures for 12 months which provide a better view of trends. To start off, we should point out that the current account imbalance is tending to show slower growth, a course that began in 2005. In the 12 months ending in October, the current account deficit grew by 18.4% year-on-year, one percentage point less than the cumulative figure for 12 months ending September. The main contribution to this slowdown came from the drop in the growth of the trade deficit.
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Deficit in transfers balance growing while incomes balance fails to improve.
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Nevertheless, whereas the services balance is still following a stationary trend, the incomes balance and the transfers balance are growing increasingly worse so that in the 12 months end in October both contributed two-thirds to the worsening (by 15.70 billion euros) of the current account balance compared with the same period the year before.
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With regard to financial flows, the outstanding note is that, in terms of the cumulative figure of 12 months, the decrease in the balance of portfolio investment is getting sharper with net entries of 117.71 billion euros, 64.80 billion less than one year earlier. In turn, net outflows for direct investment showed a small advance after several months of decreases.
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