Competitiveness Trend Index (CTI): fourth quarter 2015 (with CPIs) and third quarter of 2015 (with UVIs)

Spain gains price competitiveness throughout 2015

2016.2.5

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Spain also gained competitiveness versus the OECD, benefiting greatly from the depreciation of the Euro in the fourth quarter of the year, as in all the other quarters of the year, and by the contraction of Spanish prices versus the average increase in the prices of the rest of the OECD countries.

If we consider the CTI measured using Export Unit Value Indices, in the third quarter of the year there was a gain of competitiveness versus the EU, versus the Eurozone, and versus EU countries with which we do not share currency, due to the depreciation of the Euro against the currencies of these countries and the fact that the slight increase in Spanish export prices is less than the average increase of the export prices of our EU partners.

Also, price competitiveness versus OECD countries has improved, in this case due entirely to the exchange rate, since OECD country export prices declined strongly as a result of falling energy product and commodity prices.

CTI measured using CPIs: fourth quarter 2015

Versus the European Union

In the fourth quarter of 2015, the CTI measured against the countries of the European Union (EU-28) fell by 1.5% year-on-year. This gain in competitiveness was the result of a 0.8% drop in the exchange rate index and a decrease in the relative consumer price index of 0.7% year-on-year. Competitiveness has been gained over this zone for nine consecutive quarters.

The CTI declined by 0.8% in the fourth quarter of 2015 against Eurozone countries (EMU-19) compared with the same quarter of the previous year. This improvement in competitiveness was due to the drop in Spanish consumer prices versus the slight average increase in prices of other Eurozone countries.

Competitiveness also improved versus European Union countries not belonging to the Eurozone (EU-28 non-EMU-19) as a result of the CTI falling by 3.7% in this period. This performance was mainly due to the exchange rate index falling by 3.2% and, to a lesser extent, the drop in the relative price index (-0.5%).

Versus the OECD

In the fourth quarter of 2015, Spain gained competitiveness versus OECD countries, both versus these countries as a whole and versus countries not belonging either to the Eurozone or to the EU. This makes a run of six consecutive quarters in which competitiveness has improved versus these zones since mid-2014.

The CTI shrank by 3.9% year-on-year in this period compared with all OECD countries. This gain in competitiveness is due to a 2.8% fall in the exchange rate index, augmented by the 1.1% decline in the relative price index.

Versus OECD countries not belonging to the Eurozone, the CTI shrank by 6.1% in the fourth quarter of 2015, due to the depreciation of the Euro (a 4.9% drop in the exchange rate index) and, to a lesser extent, the 1.3% decline in the relative price index.

As in the other zones, the CTI measured against non-EU-28 OECD countries declined in the last quarter of 2015 (-6.7%). This significant gain in competitiveness was the result of a decline in the exchange rate index (-5.2%) combined with a drop in the relative price index (-1.5%).

Versus BRICS countries

The CTI versus BRICS countries (Brazil, Russia, India, China and South Africa) posted a year-on-year 6.3% drop in the fourth quarter of 2015, thereby accumulating six consecutive quarters of competitiveness gain versus this zone. This performance is due to the 4.8% reduction in the relative price index, augmented by a 1.6% decline in the exchange rate index (XRI). This makes six consecutive quarters in which the Euro has declined versus the currencies of these countries.

The average inflation of BRICS countries has been higher than Spanish inflation since the first quarter of 2006, but the strong appreciation of the Euro versus the currencies of these countries in quarters previous to the last quarter of 2014 made it hard to gain competitiveness over this zone.

CTI measured using UVIs: third quarter 2015

Versus the European Union

In the third quarter of 2015, the CTI measured against the European Union (EU-28) fell by 1.7% year-on-year. This gain in competitiveness occurred due to a 0.9% decline in both the exchange rate index and the relative export price index (the year-on-year rate of Spanish export prices is lower than average year-on-year rate of export prices for the rest of the EU-28 countries). Eleven consecutive quarters of competitiveness gain have been posted versus this zone according to the CTI measured using UVIs.

The CTI shrank by 0.8% versus the countries comprising the Eurozone (EMU-19) in the third quarter of 2015. This improvement in Spanish competitiveness was due to the fact that the relative export price index had fallen by the same amount for the eleventh consecutive quarter.

Against European Union countries not belonging to the Eurozone (EU-28 non-EMU-19), the CTI fell more sharply in the third quarter of the year, by 4.6%. This gain in competitiveness was achieved due to declines in both the exchange rate index and the relative export price index (3.6% and 1% respectively). This is the sixth consecutive quarter in which an improvement in the competitiveness versus this zone has been posted.

The depreciation of the Euro and a lower increase of Spanish export prices versus the average year-on-year variation in export prices of EU, Eurozone, and non-EMU EU countries is behind the gain in competitiveness over these countries.

In the cumulative figure to September 2015 competitiveness was also gained versus the EU, the EMU and the EU without the Eurozone countries.

Versus the OECD

The CTI measured against the countries of the OECD fell by 0.9% year-on-year in the third quarter of 2015, thereby producing a competitiveness gain for four consecutive quarters versus this zone. This improvement was entirely due to the negative year-on-year movement of the exchange rate index (-3.1%), eased by the 2.2% increase in the relative price index.

Versus countries not belonging to the Eurozone (OECD non-EMU-19), the CTI shrank by 1% in the third quarter as a result of the 5.2% decline in the exchange rate index and buffered by the 4.5% increase in the relative price index.

Conversely, the CTI versus the non-EU-28 OECD grew by 0.2% year-on-year in the third quarter of 2015, after three consecutive quarters gaining competitiveness. This performance was due to the fact that the drop in the relative price index (-5.6%) was not enough to offset the significant loss of competitiveness due to prices (RPI up by 6.1%).

In the cumulative figure to September, Spain posted a gain in competitiveness measured using UVIs against all OECD zones compared with the same period the previous year, due to the strong year-on-year depreciation of the Euro versus the currencies of these countries, which offset the relative growth in Spanish export prices.