Spanish economy March 2013 . Two strategic readings on industrial costs and external trade .

The industrial costs show a shift upwards between Dec 2012 Jan 2013 .

The trade deficit also show a shift upwards taking it from 1.294.000.000 € up to 3.458.000 € after a full year of reductions . As usual , data fed by media talks only about year on year figures which obviously ignores trend .

It confirms what Brahmason has been continuously pointing out regarding the limited export potencial of spanish companies .

The cost structure of a manufacturing company is shaped as a function of the type of investment and spanish companies are very sensitive to labor costs and raw material and energy and need therefore an environment of strong inflation of demand to produce significative earnings .

As the domestic demand collapses as a result of sustained inflation causing the inevitable bubble , companies resort to exports more as an obvious move of survival than because spontaneous vocation . The manufacturing sector has shifted activity to exports in the hope fed by official declarations that the crisis were to be overcome much sooner than reality tells and the result will be a strong deterioration of the EBIT as well as an increase of their ratio Debt / EBIT .

Brahmason

Brahmason@gmail.com

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Published in: on marzo 25, 2013 at 11:54 am  Comments (1)  

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