IMF urges reforms as Spanish exports soar

Spain's trade deficit was halved in April as exports soared, especially to China and other fast-growing emerging markets, the government said on Wednesday, offering a rare glimmer of good news for a nation struggling in a double-dip recession even as the International Monetary Fund (IMF) called on Madrid to do more.

IMF urges reforms as Spanish exports soar
Spain's exports soared by 32.1 percent to China, 85 percent to Brazil and 151.9 percent to South Africa. File photo: Ethan O'Brien/Flickr

Exports jumped 18.6 percent from a year earlier to €20.398 billion while imports rose 7.2 percent to €22.04 billion.

A trade surplus is a factor of growth in an economy, whereas a deficit tends to sap growth.

"Particularly noteworthy are the increases in exports to emerging economies with the highest growth potential," the ministry said in a statement.

The biggest increase in exports was to markets outside of the European Union. Exports soared by 32.1 percent to China, 85 percent to Brazil and 151.9 percent to South Africa.

By comparison exports to the rest of the European Union, where Spain's main trading partners are also battling recession, were up by 13.2 percent.

Exports of automobiles and motorcycles jumped by 26.8 percent, textiles by 32.3 percent and transportation equipment by 61.8 percent.

Exports have been a rare bright spot for the Spanish economy which is struggling to recover from a property crash in 2008 that has pushed the jobless rate up to a record 27 percent, saddled banks with a pile of bad loans and caused government debt to soar.

Prime Minister Mariano Rajoy's conservative government has made reforms, such as changes to labour market rules, that have reduced labour costs and help make Spanish goods more competitive.

But the International Monetary Fund, in an annual review of the Spanish economy published on Wednesday, warned that labour reform "needs to go further to generate jobs".

"The external sector will likely continue to be the bright spot, but probably not enough to generate sufficiently strong growth given weak domestic demand," it added.

Spain posted a trade surplus of €634.9 million in March, its first monthly trade surplus since 1971 as imports slumped because of a collapse in demand due to the economic downturn.

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Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).