Spain has regained about 65 percent of the competitiveness it lost during the credit bubble, according to the country’s central bank.
Unit labor costs in the Spanish private sector have fallen by 7 percentage points since they peaked in 2009, the Madrid-based Bank of Spain said in its annual report today.
That’s two thirds of the competitiveness lost compared with the euro region average since the beginning of monetary union. Including public sector pay cuts, the economy has eliminated all the accumulated losses of competitiveness, according to the report.
Spanish Prime Minister Mariano Rajoy is counting on exports to haul the fourth-largest economy out of a sixth year of slump as the deepest budget cuts in the Iberian nation’s democratic history have undermined domestic demand amid a 27 unemployment rate.
“Competitiveness gains, supported by moderation in unit labor costs, as well as Spanish companies’ greater ability to access international markets, have turned out to be the most solid support elements for the economy in this new phase of recession,” the Bank of Spain said.
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