Competitiveness Trend Index

Price competitiveness of the Spanish economy improved versus the Eurozone and the OECD in 2016

News - 2017.2.7

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Measured using Unit Value Indices (UVIs), the cumulative CTI for the year up to the third quarter of 2016 posted a gain in competitiveness versus the Eurozone and a loss versus the EU as a whole and the OECD.

While the CPI is the most common index used to analyse price trends, many of the products and services it considers are either not exportable or their impact on exports is negligible. For this reason, Unit Value Indices (UVIs) are also used, since they are a more faithful reference of export prices, due to the fact that they only take into account products and services sold abroad, weighted by their importance in exports as a whole. UVIs are published later than the CPI so the data provided is from the previous quarter.

CTI measured using CPIs

In 2016 the CTI fell by 0.7% against the Eurozone (a drop indicates a gain in competitiveness), while in the EU as a whole competitiveness worsened (0.5%), the result of the lower figure posted by non-Euro countries (4.5%) due to the appreciation of the European currency against those countries' own currencies.

With regard to the OECD, 2016 closed with a gain in competitiveness (a 0.1% drop in the CTI), due to relative price indices shrinking to a greater extent than the Euro's exchange rate against the currencies of non-Euro OECD countries.

Versus BRICS countries (Brazil, Russia, India, China and South Africa), the CTI grew by 2.2%, due to the appreciation of the Euro, only partially offset by the fall in relative price indices.

The figures for the fourth quarter of 2016 show that Spain's price competitiveness versus the Eurozone remained stable, after 13 consecutive quarters of improvement. This was due to the fact that Spanish prices rose by a similar average amount as in the rest of the Member States.

Versus OECD countries, competitiveness improved (-0.1%), while it worsened in relation to the EU as a whole (the CTI grew by 1.8%), also as a result of the appreciation of the Euro, partially offset in this case by prices rising by less in Spain than in EU countries.

Versus BRICS countries, the CTI shrank by 0.6% year-on-year, after three consecutive quarters of loss of competitiveness. The improvement was due to the fall in relative prices, since the Euro appreciated against the currencies of these countries.

CTI measured using UVIs

The cumulative CTI for the first nine months of the year shows a gain in competitiveness versus the Eurozone while, versus the EU, competitiveness was lost. Competitiveness was also lost against the OECD, mainly due to prices and, to a lesser extent, exchange rates.

In the third quarter of 2016, the CTI measured using Unit Value Indices versus the European Union (Eurostat data) increased by 1.4% year-on-year. This loss of competitiveness was solely due to the appreciation of the Euro, since Spanish export prices fell by more than the average drop in export prices posted by the other EU-28 countries.

With regard to Eurozone countries, the CTI declined by 0.3%. This gain in competitiveness was due to the fact that the UVIs of Spanish exports shrank by more than the average UVIs of all the other Eurozone countries.

Versus OECD countries, the CTI grew by 1.6% in the third quarter of 2016, largely due to rising relative price indices.

The full report, with tables, may be consulted on the website of the Ministry of Economic Affairs, Industry and Competitiveness.