The shifting paradigm of globalization, exemplified by the stagnation of the German export locomotive, presents opportunities for economies that hold a comparative advantage in service sectors. Spain is a case in point, given the strong performance of non-tourism service exports such as consulting, construction, and certain activities related to new technologies.
These activities are less affected by the barriers to international trade that have proliferated due to geopolitical tensions, primarily impacting goods. Over the past four years, the number of restrictions on goods exchanges has nearly tripled (according to the IMF based on information gathered by Global Trade Alert).
The data highlights the significant advancement of this sector in Spain. Foreign sales reached 7.6% of GDP last year, representing more than half of the income from tourism, a traditional mainstay of the economy. Meanwhile, imports of non-tourism services have stagnated, resulting in a historic surplus of around 3% of GDP in our trade balance, which was almost negligible before the financial crisis.
The remarkable growth of this sector has a significant impact at the aggregate level. Non-tourism services not only support the strong external surplus that acts as a buffer against global fluctuations but also contribute to economic growth: over one-fifth of the GDP growth recorded in 2023 is directly attributed to the strength of these sectors. In summary, the Spanish export model has diversified.
However, this favorable trajectory is subject to factors that may or may not be sustainable. On one hand, labor costs are among the most competitive in Europe, contributing to the international positioning of the sector. While the European Union presents a surplus in non-tourism services on a global scale, our surplus is proportionally higher. Additionally, Spain, along with Portugal, Slovenia, and Slovakia—economies with relatively low labor costs—has seen the greatest increase in its surplus.
On the other hand, international presence in some of these sectors (such as professional services or software activities) is primarily based on network connectivity, something achievable with relatively small companies, which are the most common in our productive fabric.
However, in other branches, the size of production units does matter, such as in logistics platforms, for example. In general, overcoming barriers to business growth is essential to consolidate the competitive advantage. Access to diversified sources of funding beyond traditional banking is one of the most persistent hurdles. Additionally, the weakness of investment in equipment and intellectual property goods is concerning: this component lags behind pre-pandemic levels when investment efforts were significantly higher than in the rest of the eurozone.
Unless there is a quantitative leap in investment, both physical and in human capital, the dynamism of the services sector will lose momentum or will depend heavily on the perpetuation, socially questionable, of low labor costs. The European funds addendum can serve as a lever, although by definition, its deployment prioritizes industry and energy, potentially overlooking a significant portion of the thriving non-tourism service sector. The key lies in mobilizing the accumulated savings of the private sector for productive investment purposes. Hence, the importance of unlocking the Brussels-proposed capital market union project, a prerequisite for connecting financial surpluses with development needs.
Europe vs. US and China The European Union once again posted a current account surplus in 2023, similar in magnitude to the pre-pandemic surplus, close to 340 billion euros. However, significant changes are observed in relations with other major powers: the surplus with the US has decreased by 55%, while the deficit in exchanges with China has doubled. During the same period, the Spanish economy has increased its current account surplus, as a result of improving balances with other European countries.