Professional Documents
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Sede di Vicenza
Corso di Laurea Magistrale in International Economics and Business
Management
International economics
A.A.2017/2018
Group work:
ANALYSIS OF TRADE BETWEEN SPAIN AND ITALY
Student:
Sirbu Olga
Contents:
1. World’s 14th largest economy and the 5th largest economy in the EU: GDP
worth 1.2 trillion USD.
2. 11th largest exporter of commercial services worldwide and 16th ranked
exporter of merchandise trade in 2016.
3. 2nd country worldwide in international tourist arrivals and in receipts (1st in
Europe). More than 82 million international tourist in 2016.
4. 13th largest economy in terms of accumulated inward FDI stock (556 Billion US
dollars) and 12th in outward FDI stock in the world in 2016.
5. Total population of 46.5 million. 4.4 million are foreign born.
6. 23 of the biggest Spanish companies have entries in Forbes Global 2000
largest companies in the world.
I would like to start my analysis with GDP growth that is an important indicator of the
economic strength of a country. The GDP measures of national income and output for a given
country’s economy. The dynamic of this indicators it’s represented in the next figure, nr.1, where
is showed the GDP constant prices, US dollars and GDP current prices, US dollars from 2005 to
2016 years.
The economy of Spain is the world’s fourteenth-largest by nominal GDP, and it is also one of
the largest in the world by purchasing power parity.
10 10.17 9.6
9.03 8.42
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unemployment rate
The crisis led to a dramatic rise in unemployment, which grew to almost 27 % in 2013.
How we can see from the graphic number 2 in the last three- four years the unemployment is
falling ( the unemployment rate decreased to 21 % in 2016), but still maintain high quotas, in
comparison with 2005-2008 years, where the unemployment rate recorderd the lowest level
(8,42 % in 2007).
Improvements in the economic situation filter down to the labour market faster. The labour
reform has produced a paradigm shift in unemployment, which at certain moments during the
crisis climbed to. Youth unemployment decreased below 50 % last year. While a recovery is
clearly underway and the government projects about 500,000 new jobs this year, economists
forecast high unemployment will linger.
Over the last three years, the Government of Spain has been implementing an intense
agenda of reforms aimed at correcting the economic imbalances and laying the foundations for
sustained growth and sustainable well-being, while making employment the highest priority for
this term of office.
To overcome economic imbalances and recover from the recession, by fostering
competitiveness, overseas activity and entrepreneurship in order to drive growth and
speed up job creation;
To guarantee the sustainability of well-being and to focus efforts on ensuring the effects
of the recovery to filter down to the people.
The Government of Spain’s determination in its reforms and a commitment from the people
of Spain have enabled confidence to be restored and the process to recover growth, employment
and well-being to begin
Another important indicator in Spain economy is the Inflation Rate, this factor also
influence the GDP growth.
Inflation Rate from 2005-2016 years
5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-1
-2
Ряд 3
This graphic shows the inflation rate in Spain from 2005 to 2016. The inflation rate is
calculated using the price increase of a defined product basket. This product basket contains
products and services, on which the average consumer spends money throughout the year.
Though Spain inflation rate fluctuated substantially in recent years, it tended to decrease through
2005-2016 period. In 2016, the average inflation
Government DebtratetoinGDP
Spain decreased by about 0.2 %
compared to the previous year. The inflation rate in Spain reached the highest level of 4,1 % in
2008
120 and a record low of -1,37 % in 2009.
The next index (figure number 5) shows the progression of the national public debt in
Spain.
100
80
60
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
25
20
15
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0%
1%
18%
36%
11%
9%
3%
4%
19%
The last two indicators that we analysed are Spain imports and export. Spain’s trade plays a
significant role in the nation’s economy, accounting for more than hals of its GDP. The nation,
has, however, had a trade deficit persistently over the past few years, which stood at $77.5 billion
in 2009.
In 2016 Spain imported $299B, making it the 15th largest importer in the world. During the
last five years the imports of Spain have decreased an annualized rate of -0.823 %, from $352B
in 2011 to $299B in 2016.
Volume of imports of good and service
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-5
-10
-15
-20
The most recent imports are led by Crude Petroleum which represent 6.25 % of the total imports
of Spain, followed by Cars, which account for 6.1 %.
Its top imports are Crude Petroleum ($18.7B), Cars ($18.3B), Vehicle Parts ($16.6B),
Packaged Medicaments ($9.9B) and Petroleum Gas ($6.7B).
4.4
14.7
5.2
6.7
12
7.1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-5
-10
-15
7.6
11.4
7.8
In the last twenty years Spain has experienced a period of rapid growth followed by a very
deep crisis. Until 2007, it was named “the Spanish economic miracle”, and after 2008 it was the
country with the highest unemployment rate in the EU amongst many other very serious
problems.
In conclusion, following the analysis of all the data presented above in 2008, Spain was
badly affected by the global credit crisis. The Spanish property market collapsed leading to a
deep recession, that persisted for several years. Since , Spain has seen a sharp fall in GDP.
How we saw in the figure number 3 „Unemployment Rate”, even during the economic boom,
with all improvements, with an intense implementing agenda of reforms, unemployment remains
stubbornly high in Spain, especially youth unemployment.
In July 2012, Spain’s unemployment rate was above 20 %, its stock market was at its lowest
point in a decade, and the government was borrowing at a rate of 7,6%. With domestic demand
depleted and no sign of recovery in sight, President Mariano Rajoy and the European Union
decide to enact reforms to renew credibility in Spain and increase exports from the country.
These reforms can be broken down into three main categories: financial market refoms,
fiscal measures, and labor market reforms. While financial market and fiscal meausres restored
foreign investors’ confidence in Spain, driving down interest rates by over 400 basis points and
increasing Spain’s stock market to record levels, the labor market reforms decreased unit labor
costs by nearly 4%.
Since implementing the reforms, Spain’s exports increased by an average of over 4% at the
same time as exports in Italy and France increased by less than 2 %. Athough not conclusive,
comparing Spain to neighboring countries suggests that the country has been largely successful
in driving an export-led recovery.
30
25
20
15
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Imports Exports
2.5
1.5
0.5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Figure 17: Exported goods from Spain to Italy by Product Group, 2005-2016 years (Billion US
dollars )
From Figure 17 “Exported Goods” we can deduce that the most exported goods to Italy are
Chemicals. Between 2005 and 2011there has been a dynamic growth in terms of exports: from
1,492 Billions in 2005 to 3,093 Billions in 2011 , this year reached the peak of exports. After this
year the Chemicals Products has been registered a decrease, but it still remains the Product
Group in which there are more exports to Italy.
The second Product Group that has been registered a positive trend till the crises in 2008 are
Vegetables. It’s growth started with 1,67 Billions in 2005 to 2,22 Billions in 2008, after the
crises from 2009 to 2014 the demand of this product has been fluctuated and after 2014 when is
registered the peak of Vegetable exports with 2,91 Billion US dollars, has tended to decrease.
Another relevant Product Group for Spain’s exports is the Metals, that had the first position
in exports from 2005-2008 years, but after the crises has maintained the third position. The peak
of this Product was registered in 2007 with an increase of 2,866 Billion before the crises and in
2011 with 2,772 Billion, after the crises.
For Fuels products we can observe a substantially growth in 2013 and registered the
highest level in his Balance of Trade of 1,261 Billion , after this year has tended to decrease.
For Minerals, Animal and Food Products the exports were maintained throughout the years
at a constant level.
Spain Import from Italy by Product Group
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Figure 18: Imported goods from Italy to Spain by Product Group, 2005-2016 years(Billion US
dollars )
In terms of imports from Italy to Spain, as we can see form the graphic number 18, the
main sectors are certainly Metals and Fuels Products. But after the crises both of this Products,
has been registered a substantially decrease, from the highest level in amount of 4,754 Billion in
2008 to 0,968 Billion in 2015 for Fuels Product, and for Metals the peak of imports was
registered in 2007 with an amount of 4,555 Billion, and tended to decrease till 2,35 Billion in
2016 . Another important industries for Spain imports are Chemicals Product. Starting with the
2005 years, the amount of Chemicals imports was 2,165 Billion , and till the 2016 year was
registered 2,35 Billion US dollars.
Others relevant imported goods are Vegetable, Food Products, Minerals and Animal
Products, that has been maintained at a constant level during the all years.