Spain | Winners and losers of a stronger euro

Summary

The recent appreciation of the euro against the dollar—more than 10% since the lows at the beginning of the year—has shifted the price competitiveness of Spanish companies and the purchasing power of households.

Key points

• Key points:
• BBVA Research expects the euro's strength to persist, driven by a gradual narrowing of the interest rate differential between the U.S. and the eurozone.
• Maintaining a stronger euro will negatively affect the goods export sector, which is particularly vulnerable after more than two years of stagnation.
• Small margins of industrial exports makes it difficult to offset the loss of competitiveness. However, the impact on exportable services will be more limited.
• Overall, BBVA Research forecasts suggest that total exports in 2025 could be 2% lower than expected compared with a scenario without the appreciation of the euro.
• But it's not all negative effects. The appreciation of the euro makes imports cheaper, easing inflationary pressures, which will help improve household purchasing power, especially in durable consumer goods and energy.

Geographies

Topics

Tags