01 November, 2013

By VIVA Team

A solid export industry and traditionally strong tourism sectors have helped swell Spain's coffers

Somebody like Bill Gates might scoff, but when Spain checks her current account tomorrow morning she will see the figure of €2.53 billion staring back at her – a figure that is the healthiest it has been for 15 years.

How can this be? Spain is supposed to be the poster child of all that has gone wrong with the eurozone project, with big, bad Germany hoovering up all the disposable cash available like some particularly greedy casino boss…

In actual fact, Spain’s own export industry – second in the EU behind Germany’s – is to thank for the current account surplus, which was triple what it was this August compared to last year, when Spain had just €850 million to spend.

So what does this mean? Is the crisis… over? Not quite. A current account surplus is all well and good, and is certainly a sign that things are improving on the fiscal front, but the deficit remains, job creation is low and unemployment is high.

However, on the trade front, things have rarely looked so rosy. Spain’s trade deficit is now just €1.23 billion, having reached €2.69 billion last summer, while the country’s export industry is up by 4.3 per cent.

The country’s traditionally strong tourism industry also enjoyed one of its finest summers on records, bringing in a cash surplus of €4.7 billion – a vast sum that has really helped swell Spain’s coffers before the winter months.

Back in January 2008 – a few months before the country’s economy all-but crumbled – Spain’s current account deficit was a whopping €12 billion. We all know what happened next: banks collapsed, the construction industry began to flounder and jobs were shed all over the country.

Whether a boom of similar proportions is set to follow seems unlikely. But there are positive signs for Spain’s economy wherever you look: foreign investment in Spain pretty much doubled to €18.76 billion in the first eight months of 2013 compared to the same period in 2012.

Foreign cash is preceded by foreign confidence. Foreign confidence is likely to instigate domestic reassurance, which will hopefully facilitate not just an upturn, but a sustained economic recovery.

“The more international companies buy into Spain, the more Spain will become immune to the supply side constraints on lending,” Deutsche Bank economist Gilles Moec told Reuters. “They will not be influenced by the Spanish situation, so it is very important we see a continuation of these flows.”

After a tough couple of years, the good news stories for Spain’s economy just keep on coming…