BBVA Research: "Spain records highest euro zone productivity growth, up 11.1% since 2008"
According to BBVA Research’s latest Economic Watch, Spain is regaining competitiveness and productivity the quickest of all the euro zone countries which could put the economy “on the path to sustained recovery.” Over the past four years Spain has recovered much of the competitiveness lost the previous decade by increasing productivity per worker and price and cost competitiveness.
- (1888PressRelease) April 10, 2012 - This improvement is apparent in various areas, including the significant growth in exports which have enjoyed double-digit growth in recent years. Spain has enjoyed the highest growth of all the euro zone, with the exception of Estonia which joined the euro in 2011-.
A country-by-country comparison provides a better snapshot of the strong growth in Spain which, at the end of 2011, was exporting 9.5% more in real terms than before the crisis. Germany ranked fifth with a 5.3% increase in exports since the beginning of 2008, followed by Ireland with 4.3% growth. Exports were up 1.1% in the euro zone as a whole.
The weight of exports in Spain’s GDP has risen from 22.8% in 2009 to 30.5% in 2011, yet further proof of the economy’s strong performance. It has also managed to retain its share of world trade despite the upsurge of China and other Asian economies.
BBVA Research’s Economic Watch notes that peripheral economies still have some way to go in terms of competitiveness and must continue to adopt stimulus measures. In Spain’s case, among the factors which have helped boost exports is the improved quality and competitiveness of prices, as illustrated by the inflation differentials with the euro zone which have favored Spain in recent years.
Turning to production costs, according to BBVA Research up until now wages in Spain showed little correlation with growth or productivity both in macroeconomic and corporate terms. Thus, between 2001 and 2007 wages per worker in Spain rose at an annual rate of 3.2%, whereas productivity failed to increase, thereby eroding the competitiveness of Spanish products.
Ireland suffered the widest gap between wages and productivity in this period, rising to 5.8% and 1.7%, respectively. The trend in Germany meanwhile was the opposite, with wages rising 0.9% and productivity 1.3%.
According to BBVA Research’s Economic Watch, after various years of wages outstripping productivity in Spain, this situation is correcting. However, it also notes that the changes introduced by new labor legislation guarantee increased competitiveness "so long as productivity continues to improve".
Increased working hours have also helped boost productivity per worker in Spain. The average working day in the fourth quarter of 2011 was 35.2 hours compared to 34.3 hours in 2008, up 2.6%. This figure contrasts sharply with the situation in Germany for example where the number of hours per worker declined 0.8% between 2007 and 2010 meaning that workers there worked on average 14.7% fewer hours than their Spanish or Irish counterparts.
The increase in hours worked in Spain is also part of the reason productivity per worker has increased 11.1% since the beginning of 2008, the highest increase in the entire euro zone. That said, even taking into account the longer working day, improved productivity has held strong, rising 8.3% per hour, as in Ireland, and seven percentage points higher than the euro zone average.
BBVA Research concludes that all of the factors which have helped increase competitiveness in Spain will continue in 2012, both for increased productivity and improved costs. By the same token, it notes that after a decade of stagnant competitiveness, Spain’s recovery is now outperforming all other euro zone countries.
The experts at BBVA Research also emphasize that the recent labor reform should help boost the recovery in productivity and competitiveness and that this improvement will help ease the impact of the adjustments which the Spanish government must still implement, such as fiscal consolidation, restructuring of the banking system and reducing the size of the housing market.
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BBVA is a customer-centric global financial services group founded in 1857. The Group has a solid leadership position in Spain, it is the largest financial institution in Mexico and it has leading franchises in South America and the Sunbelt Region of the United States. Its diversified business is biased to high-growth markets and it relies on technology as a key sustainable competitive advantage. BBVA ranks among the leading Euro zone banks in terms of ROE and efficiency. Corporate responsibility is inherent to its business model, promotes inclusiveness and supports scientific research and culture. BBVA operates with utmost integrity, long-term vision and best practices, and is included in the main sustainability indexes.
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