“Madrid is the first autonomous community in number of exporting companies, with 36,1% and the second exporting region, with 15,2%”

Interview with Ángel Asensio, president of the Madrid Chamber of Commerce

Madrid companies face challenges such as the slowdown of the world economy, inflation, the war in Ukraine or economic fragmentation. For this reason, many companies are betting on internationalization to boost their businesses, thus diversify markets and redistribute their commercial flows, while improving competitiveness.

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The president of the Madrid Chamber of Commerce, Ángel Asensio, analyzes the economic situation of the country, the trends in foreign trade and the challenges that companies have to overcome.

 

What are the GDP growth forecasts?

 

High inflation, energy and food prices, together with the rise in interest rates, will significantly reduce private sector confidence and thereby slow down economic activity. Furthermore, the euro zone will continue to face high energy uncertainty, especially with regard to natural gas imports and electricity generation. Despite all this, a notable improvement in global GDP is expected in 2024 compared to 2023, going from 2,3% to 3,1%. I highlight that Madrid is the autonomous community that contributes the most to the national GDP with almost 20%.

 

We are experiencing a global increase in inflation. What is this due to?

 

The war in Ukraine is the circumstance that has had the greatest impact in 2022 on the increase in global inflation, causing a notable increase in food and energy prices. Forecasts suggest that inflation will decline throughout 2023, the rapid increase in interest rates is causing a drop in consumer demand, which will lead to a relaxation of raw material prices and less pressure about the supply chain. 

 

Is this downward trend expected to continue in 2024? 

 

At a global level, the forecast is for it to decrease, for 2024 it is 4,4% compared to 6,8% in 2023. In advanced economies, inflation is expected to be 2,5% in 2024 compared to 5,3% in 2023. In the US 2,5% compared to 4,0%. In China, 2,3% in 2024 compared to 2,5% in 2023; while in the euro zone it will be 2,7% compared to 6,0%.

 

By what percentage have exports been growing in recent years?

 

Since 2011, exports have been increasing progressively, except in 2020 when they decreased by -27.000 billion compared to the previous year. But this was an exceptional situation derived from Covid-19. As a whole, exports have gone from 215.000 billion in 2011 to 389.000 billion in 2022, which represents an 83% growth in exports. The foreign sector already accounts for close to 30% of Spanish GDP. With 2021 figures, by autonomous community, Madrid represents 12,6% of total exports, occupying second position after Catalonia. In this first quarter of 2023, Madrid continues to be the second Spanish exporting region, with 15,2%.

 

It should be noted that Madrid is the region that is contributing the most to the growth of exports. The Community of Madrid achieved the highest export growth in Spain in 2022, followed by the Basque Country and Andalusia. Furthermore, Madrid is currently the first autonomous community in number of exporters, with 36,1%, while Catalonia is second with 26,9% of the total exporters.

Have imports also increased?

 

In relation to imports, they have also increased throughout the period 2011-2022, with some exceptions, among which the year 2020 stands out, when the greatest decrease occurred, going from €322.000 million in 2019 to €277.000 million in 2020. In general terms, between 2011 and 2022 imports increased by nearly 80.000 billion euros. In fact, in 2022 this value exceeded 457.000 million, this being the highest figure reached in the period. By autonomous community, in 2022 Catalonia was the region that experienced the greatest growth in its imports, with 4% compared to the previous year; while the Community of Madrid, on the contrary, saw its imports reduced by -3,9% year-on-year.

 

What are the main destinations of Spanish exports?

 

Historically, the European Union absorbs the highest percentage of Spanish exports (€244.200 billion in 2022, although technically within the EU we cannot speak of exports, but rather of “intra-community deliveries”), followed by the rest of Europe (32.200 billion) and of Asia (32.000 billion). In Europe, the main destinations for Spanish exports in 2022 have been: France (16,24%), Germany (10,44%) and Italy (8,16%). 

 

Trade in services is increasing and growth of 21% to 25% is estimated until 2030. Which services will benefit the most?

 

In Spain, service exports have increased by 30,3% in the last year, according to the International Trade in Services Survey. Among the sectors that have grown the most is Transport, with 6.853,6 million euros of exports; Business Services, with exports worth 7.626,5 million; and Telecommunications, computing and information, with 3.961,7 million euros in exports.

 

 

 

What are the biggest challenges that companies face throughout this year?

 

Firstly, the biggest challenge companies face is inflation and economic recession, coupled with supply chain security; but there would also be other challenges such as meeting customer expectations; adapting to digital transformation or facing the continuing talent crisis. Added to this would be safeguarding the security of data and devices or complying with sustainability policies, two points that are becoming more and more important.

 

What will happen to companies that are not able to adapt?

Companies have to identify and adapt to the disruptive changes that are currently occurring. If they don't achieve it, they have little chance of growing. Technologies such as robotics, AI, the Internet of Things, Big Data or the Metaverse are impacting international trade, contributing to improving the comparative advantages of the companies that use them and with which they can reduce costs and improve logistics.

 

How can chambers of commerce help companies in their internationalization processes?

The chambers of commerce are at the side of companies to advise them throughout the internationalization process and offer them updated information on each step in their exit to foreign markets. Furthermore, their role will be key when it comes to informing and contributing their experience, since the implementation of new technologies will produce changes that will require adaptations of the legal frameworks in different countries and the chambers of commerce will be fundamental support for be updated at all times.

 

What tools does the Madrid Chamber put at the service of companies that want to export?

 

In the case of the Madrid Chamber of Commerce, through the areas of international promotion and international trade management, within its international department, it makes available to the Madrid business community a series of tools and instruments to promote internationalization and support in all processes and technical and management aspects of the international activity of companies, whether in matters of taxation, customs, issuance of certificates of origin, temporary export documents, financial support for exports, promotion of international business cooperation, etc. 

 

Some of these support measures are developed in collaboration with institutions such as the Madrid City Council and the Community of Madrid. In this second case, as a result of a collaboration agreement between the Chamber and the Community of Madrid, the Single Window for Internationalization was created in 2019, a free information and advice service on internationalization, with the aim of facilitating Madrid companies an information and advice point for access to foreign markets.