Look on the Bright Side
Bravo, Fiona, Newsweek
Byline: Fiona Bravo
Spain is more competitive than you think.
You know Spaniards are depressed when Coca-Cola broadcasts a television commercial encouraging citizens to "go get 'em." The spot cuts away from foreign commentators predicting Spain's imminent collapse to showcase the country's strengths: engineers, high-speed trains, and, of course, soccer. In the midst of a currency crisis, steep credit downgrades, and a 100 billion euro bailout of its banking system, it's easy to be pessimistic about Spain. But there are some grounds for optimism.
Start with exports. While Spanish wages rose much faster than the euro zone average during the pre-crisis years, large exporters kept costs under control, allowing them to stay relatively competitive. Meanwhile Spanish employers with more than 250 workers stayed just as productive as their German, Italian, and French counterparts, according to BBVA, Spain's No. 2 bank.
Consequently, despite Asia's rise, Spain has managed to hang on to its global market share of exports. That puts it in a league with Germany and well ahead of most of the euro zone. Inditex, the apparel group best known for its Zara retail chain, is a poster child of Spanish competitiveness. It shrugged off the European financial crisis and even delivered a sharp rise in first-quarter profits.
The catch is that exports, which account for about 30 percent of Spain's GDP, can't compensate for the steep drop in demand at home. …