The Bank of Spain concludes that this fall in world trade is "a relatively infrequent phenomenon", and that Europe is suffering more because its economies have a greater degree of openness to the outside world than the United States or even China. "The slowdown in world trade has moved intensely to exports and the activity of European economies," the report says, and "contributes in a remarkable way to explain the weakening of the activity that was observed throughout 2018" in the euro zone.
DEALING WITH WORLD TRADE
The poor performance of the foreign sector has justified, to a large extent, the strong downward revisions that have been made to the European growth forecasts. Last week, the OECD cut those in the euro zone from 1.8% to 1%. And the ECB, from 1.7% to 1.1%. The political uncertainty in Italy, the Brexit and the yellow vests in France have also contributed to the deterioration. But above all it worries how the slowdown of China in the sales of Germany can be noticed. In the middle of the commercial tensions and accusing a high indebtedness, the Asian giant has restrained the investment and it does not obtain that the consumption replaces it with the same push.
As pointed out by the Bank of Spain, sales of goods from the eurozone abroad grew by 2% in 2018, well below the 4.3% registered in 2017. "The year ended with real advance rates lower than 1 % in year-on-year terms and with setbacks in some countries, such as Germany, Italy and Spain "warns the organism. And he adds that industrial production, which tends to have a greater export orientation, was also scored "modest growth" in the set of 2018.
"Although the process of creating the monetary union has led to an intensification of trade relations among the member countries, the increase in exports to markets located outside the area has been even greater," he explains. Extra-Community exports have gone from 48% of the total in the year 2000 to 55% in 2018. Especially because of the increases towards China and the rest of the EU countries, such as Poland, Romania or Hungary. To the point that these destinations are more important than the United States or the United Kingdom.
As for the reasons for the slowdown in exports, the Bank of Spain figures up to five. One is the contraction of sales to the United Kingdom this year and the weakening shown since the vote in 2016 in favor of Brexit. Two, the deceleration of exports to other countries of the EU and Russia. Also of those of Turkey, which suffers a recession and the depreciation of the lira.
Three, China's slowdown, which draws the lowest growth rate in three decades and which imports many European capital goods. Four, the difficulties of the automobile to adapt the new environmental standards and the uncertainty about the future of diesel. This industry has a high weight in European exports and, especially, in those of Germany, which makes 50% of all exports of vehicles in the euro zone. And five, the appreciation of the euro that occurred in 2017 and whose effect may have been noticed in 2018.
Sales to the US rise
In sharp contrast, the vigor of exports to the United States stands out despite commercial tensions. Although the Spanish supervisor does not say so, experts point out that the fiscal impulse provided by Trump may have increased the consumption of goods from outside the country, making his trade deficit even bigger despite the protectionist rhetoric.
The deceleration of trade is translating into a loss of market share outside the union. This is happening to the four main economies of the euro zone except France. Spain, which had won a larger share of the pie with the crisis, now loses.
Regarding the future, the entity warns of two threats: the investigation of the United States on imports of European cars, or the diversion of trade outside the euro zone that could provoke an agreement between Washington and Beijing.