Boston, MA -- (ReleaseWire) -- 01/03/2014 -- We believe that the Spanish economy will return to growth in 2014, although its medium and long-term outlooks remain bleak. We estimate real GDP to have contracted by 1.7% in 2013, and to grow by 0.3% in 2014, stressing that a faster economic recovery will be prevented by weak private consumption, ongoing fiscal consolidation and falling fixed capital formation over the next few quarters. As a result, the freight sector will continue to be weighed down by the macroeconomic picture; falling disposable incomes and high unemployment in particular will mean that import growth is unlikely to rise anytime soon.
However, falling wages, new labour laws and a gradual reorientation of export destinations have made conversely made Spanish exports more competitive. This is expected to provide the sole boost to the country's freight transport volumes over 2014.
Headline Industry Data
- Air freight volume is set to grow by 1.3% to reach 607,300 tonnes in 2014. Medium-term growth (to 2018) will average 1.8% per annum.
- Tonnage handled at the Port of Algeciras will grow by 2.0% to reach 86.184mn tonnes, with medium-term growth averaging 2.9% per annum.
- Boxes handled at the Port of Valencia will amount to 4.451mn TEUs in 2014, an increase of 1.3% on 2013 levels, while medium-term growth will average 2.3% per annum.
- Rail freight volume will grow by 5.8% to 29.2mn tonnes in 2014, and by an annual average of 6.1% up to 2018.
- Cargo handled by road is set to increase by 1.6% to 1.271bn tonnes, with medium-term growth expected at 2.4% per annum.
- Total Spanish trade (imports + exports) will grow by 1.9% in real terms in 2013.
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Key Industry Trends
Unhealthy Reliance On Eurozone To Weigh On Freight Outlook
According to latest data, Spain's intermediate goods exports (which account for 51.2% of total exports) growing by 13.1% year-on-year (y-o-y) in Q113, and by 55.9% from 2008 to 2012. However, it is important to note that weak demand from EU countries will prevent a more significant widening of the current account surplus going forward. Although Spain is gradually reorienting its exports away from the EU and towards emerging markets, with the share of exports destined for EU countries falling from 71.1% in 2006 to 61.2% in April 2013, we believe the still-significant reliance on eurozone demand will ensure that export growth remains below-potential. For the moment Spain's freight sector remains at the mercy of demand from its immediate neighbours - many of which are far from rude health themselves.
Flailing Domestic Demand Gets Respite From Resurgent Export Competitiveness
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