Car buyers give rise to hope
Germany is Spain’s most important trading partner. Imports and exports have slumped during the corona crisis, yet there are some positive signs, too.
The corona crisis has had an impact everywhere, but Spain has been the hardest hit of the 36 countries of the Organisation for Economic Co-operation and Development: the OECD expects Spain’s gross domestic product to slump by 14.4 percent in 2020. The country has not experienced anything on this scale since the Civil War in the 1930s.
Important role played by auto industry
Exports have enabled Spain to record a trade surplus ever since 2013. The country’s most important trading partner – its biggest supplier and second-largest consumer after France – is Germany. Spain plays a somewhat smaller role for Germany: it is the number twelve supplier and consumer. The bilateral trade balance is significantly in Germany’s favour: exports to Spain totalled 44.3 billion euros in 2019, whereas imports from there amounted to 33.2 billion euros.
Spain’s leading industry after tourism is the automotive industry. Around a third of Spanish exports to Germany in 2019 were vehicles and vehicle parts (11.5 billion euros). And the international auto market is now picking up again, as it also is in Germany. This incipient upswing is bound to have a spill-over effect on the Spanish economy – in a positive sense. The next-most important products for the German market, following far behind cars, were agricultural (3.6 billion euros) and chemical products (2.2 billion euros).
Positive performance of service sector
Spain’s foreign trade collapsed in the first half of 2020, hardly surprisingly: exports and imports were down by 15.8 percent and 18.8 percent respectively on the first half of 2019. In trade with Germany, imports fell even more sharply (by 21 percent), while exports declined somewhat less markedly (by 14.4 percent). There is a reason for the latter figure: trade in food has been hardly affected at all by the corona crisis. In fact, Spain managed to step up its exports of fruit and vegetables to Germany during recent months.
Unlike the trade balance, Spain’s service sector balance vis-à-vis Germany is unequivocally positive. This is thanks to tourism: German tourists spent 7.35 billion euros in Spain last year, whereas Spanish tourists in Germany spent only 1.2 billion euros. Little of this remained during the corona crisis: in July, normally the best month of the year as far as tourism is concerned, only a quarter of the previous year’s number of foreign visitors came to Spain. Put another way, this means that revenues were 75 percent down on a normal year.