Wednesday, March 20, 2013

The Export That Isn't: Tourism

I have had reason before to question the credentials of Luis de Guindos, he who has the title of minister for the economy and competitiveness but who does his very best to demonstrate that he shouldn't be minister for either. Let's be fair though to Sr. de Guindos. He may not have noticed something, so let's just go back, for example, three years to 2010. What, as reported by the World Bank, contributed 15.4% of Spain's total exports in that year? Did Sr. de Guindos not notice? Has he not noticed since? The 15.4% was the percentage of exports through tourism.

There has been an arcane debate about whether tourism is an export or not, a debate I don't intend to bore you with, but it is one that has now been won and has come down on the side of export. The World Bank recognises tourism as an export, the UN's World Tourism Organization recognises it as such (tourism, according to the WTO, ranks fourth in global export categories), the US Government recognises it also - 168,000 million dollars were contributed to the US economy in 2012. And even the Spanish Government recognises tourism as an export. Maybe.

In an address in Madrid in January, Taleb Rifai, the secretary-general of the WTO, said that "here in Spain (and the WTO is based in Madrid), the government identified tourism as the country's main export sector as it took office". When the national government launched its national tourism plan, Soraya Saenz de Santamaria, the deputy prime minister who does a very good impression of in fact being the prime minister, emphasised the importance of tourism. It is "the policy of the state", she said. However, there is someone in the Spanish Government who seems to be unaware of this state policy. Luis de Guindos. Or maybe he is aware, just that, and he is only minister for the economy and competitiveness after all, he manages to overlook tourism's export role.

The Spanish Government's one bit of good economic news over the past couple of years has been the strength of exports. De Guindos pitches up from time to time at press conferences, says how marvellous the export sector is and totally ignores tourism. He talks about everything else but the sector which, by only a small margin, is the second largest contributor to Spain's exports. In 2012, tourism contributed 43,306 million euros, beaten only by a category of capital equipment (43,732 million euros). As a percentage of total exports, tourism had risen to 16.2%.

The astounding fact is that the data for the performance of different export sectors come from, yes, de Guindos's ministry and these data are used for the calculation of Spain's balance of payments. So why does the minister repeatedly fail to recognise tourism as an export? It's a very good question, the answer to which is that I haven't a clue. And nor do any other commentators. There are guesses as to why, and principal among them is that, though the government talks a good tourism talk, it doesn't walk it, as in making tourism a priority economic sector. So much for state policy, if this is true. 

Another guess is that the government is a bit too embarrassed to admit to the contribution that tourism makes when it is doing what it can to reduce this export competitiveness - increasing IVA, increasing airport taxes, these sorts of far-sighted policies. It puts up the tourism minister Soria to say how wrong the Balearic Government is for imposing a tax on car hire, and so attempt to appear to be righteous and to be emphasising state policy, while at the same time failing to recognise that its own policies might not be the most advantageous for tourism.

It is through exports that the government will manage to effect some positive growth. It will not do it any other way. But, and I've said this previously, it is hard to see how this could be sustained. When, if, recession comes to an end, pressure will be brought to bear to reverse the downward trend in labour costs, i.e. there will be pressure for wage and salary increases. While these would have an impact on tourism, the impact would be greater in other export sectors; tourism is remarkably resilient compared with some other parts of the economy. The government, therefore, should be doing all it can to not just ensure tourism growth but to ensure its grows more quickly. Not in two or three years time but now. But then, and despite state policy, if the minister for the economy and competitiveness is unaware of tourism, then how can it?

Any comments to please.

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