U.S. exports projected to rise despite decline during Jan.-May - Spain

Although U.S. sales to Spain declined slightly to $1.i billion during the first five months of 1984, the outlook for the rest of the year is for positive growth. Spanish trade data indicate a 6 percent rise in imports from the United States during the first four months of this year despite strong competition and an overall drop in total Spanish imports. In addition, the U.S. share of the market has risen from 11.8 percent in 1983 to 12.7 percent in January-April, reversing a two-year slide.

The Spanish trade balance improved rapidly in the first four months of 1984, as Spanish exports responded well to the government's new strategy of focusing on the United States and Europe. The gap in imports over exports was only $1.6 billion compared with $4.2 billion last year at that time. Compared with the same four-month period in 1983, exports increased 33 percent to $8 billion. By contrast, Spanish imports declined by 5.4 percent.

Spain's strong trade performance is a major contributing factor to the anticipated real increase in GDP of nearly 3 percent in 1984, up from last year's 2.2 percent. It also was a contributing factor to the rapid increase in foreign exchange reserves registered so far this year. Spain's gold and foreign exchange holdings grew by $2.3 billion from December 1983 through mid-May, reaching a total of about $13.5 billion. The cumulative inflow of foreign exchange could put strong upward pressure on the value of the peseta in exchange markets.

Spanish unemployment reached a rate of 20 percent in the first quarter but is expected to decline over the balance of the year. Inflation has dropped to an 11 percent annual rate. Business confidence appears to be returning along with a good deal of formerly exported capital. In fact, total exchange inflows have been so large that the peseta actually appreciated during the first four months against all major currencies, including 5.2 percent against the dollar. U.S. products thus declined in local pricing, enhancing their competitiveness. Should the peseta appreciate too greatly, however, Spain's export expansion could slow and put the brakes on expected economic growth.

The Spanish government has established recently an imaginative $7 billion, three-year, industrial reconversion and development plan, consisting of investment capital, loans, credit guarantees and tax exemptions to assist in the orderly phasing down of sunset industries and to stimulate new industrial development. A second $900 million, five-year plan intended exclusively for the creation of an internationally competitive electronics industry is now being debated by the Spanish Parliament.

These programs offer unique opportunities for American firms, both for the sale of merchandise and for the licensing of technology and the establishment of joint ventures. Particularly good opportunities should exist in the fields of computers, peripherals, and software; electronic components; telecommunications; electronic production and test equipment; process control instrumentation; and chemicals. In services, markets are emerging for insurance, leasing, franchising, and health care programs. The Commerce Department will participate in the major Spanish chemical fair, Expoquimia, Nov. 19-24.

For additional information on Spain, contact the desk officer on (202) 377-4509.

COPYRIGHT 1984 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group