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​Competitiveness Trend Index

Price competitiveness of the economy against the EU eased its decline in the third quarter

Wednesday 8 November 2017
Ministerio de Economía, Industria y Competitividad

The price competitiveness of the Spanish economy against the EU eased its decline in the third quarter of the year as a result of both the contained appreciation of the euro and the continuing positive price growth differential, according to the Competitiveness Trend Index (CTI) calculated using the Consumer Price Index (CPI).

With respect to the OECD, the appreciation of the euro against the principal currencies of this zone has given rise to a 2.7% increase in the CTI.

The CTI uses the exchange rate and prices to measure the competitiveness of exports. Although the CPI is the most commonly used price index, many of the products and services it includes are either not exportable or their impact on exports is negligible. For this reason use is also made of Unit Value Indices (UVIs), which only consider the prices of exported products and services, weighted by their importance in exports as a whole.

UVIs are calculated later than the CPI so the data provided is from the previous quarter. Now information on indices measured with Unit Labour Costs (ULCs) is also included; this indicator allows us to analyse the trend in the cost competitiveness of the economy and is also calculated one quarter later than the information published for the CPI. Increases in the index reflect losses of competitiveness and vice versa.

CTI calculated using CPI

The data for the third quarter 2017 shows that Spain's price competitiveness against the Eurozone worsened slightly, since the CTI rose by 0.3%.

The increase in the CTI was lower than that of the second quarter (0.6%). This was due to the fact that the average rise in prices in Eurozone countries was a little lower than that recorded for Spain. This increase in the HCPI above that of our trade partners is consistent with the scenario of stronger economic growth in Spain.

Competitiveness was also lost against non-Eurozone countries; the CTI posted year-on-year growth of 0.8%. This trend is explained by the appreciation of the euro against the average of the currencies of these countries (1.2%), mainly due to the depreciation of the GBP, while the relative price index fell by 0.3%.

Competitiveness against the EU as a whole worsened by 0.5% according to the CTI, due to a slight rise in both the relative price index and the exchange rate index.

With respect to the OECD, the CTI increased by 2.7%, as a result of the appreciation of the euro by 2.8% (especially against the dollar and the Swiss franc), since the relative price index scarcely changed.

Against BRICS countries (Brazil, Russia, India, China and South Africa), the CTI grew by 3.3% year-on-year in the third quarter. The worsening of competitiveness against this zone was largely due to the exchange rate index rising by 3.4%, since the price index only fell by 0.1%.

The cumulative figure for January-September for the CTI against the EU shows losses of competitiveness that are worse than those of the third quarter, due to stronger CTI growth in the first half of the year. Compared with the OECD, the figures for the first nine months of the year show losses of competitiveness lower than those in the third quarter. Against BRICS countries the CTI calculated using CPIs reflected a 1% improvement in competitiveness in the first three quarters of 2017.

CTI calculated using UVIs

In the second quarter of 2017, the CTI measured using UVIs improved against EMU-19 countries, with a 0.5% drop, because the increase of Spanish export prices was lower than that of the average for the zone. However, the indicator worsened against non-Eurozone countries (2.3%), due to the rising exchange rate index. In the EU-28 the loss of competitiveness was 0.2%, because the appreciation of the currency was partially offset by the slower growth of export prices.

With respect to OECD countries the CTI showed a gain in competitiveness of 0.3%, mainly due to the drop in the relative price index, which offset the appreciation of the euro against the Eurozone currency basket. This gain in competitiveness was greater against OECD countries not forming part of the EU-28.

In the first six months of the year, the gain in competitiveness against the OECD according to CTI measured using UVIs stood at 0.5%.

CTI calculated using ULCs

The CTI calculated using ULCs shrank by 1.7% in the second quarter of 2017, which means a return to a scenario of cost competitiveness improvement after the slight worsening of the previous quarter. The reason behind this gain in competitiveness was the performance of the Unit Labour Cost index, which fell by 2.4%, compared to the 0.7% increase recorded by the exchange rate index.

This improvement in competitiveness was higher than that of the EMU-19, while the appreciation of the euro caused the reduction of the CTI against non-EMU-19 countries to be just 0.5%.

The cumulative figure for January-June for the CTI measured with ULCs showed a gain in competitiveness of 0.8% against the EU-28 as a whole and a slightly higher gain against the EMU-19. However, the strong appreciation of the euro gave rise to a 0.5% loss of competitiveness against European countries not belonging to the EMU-19.

The full report, with tables, may be consulted on the website

Non official translation