No one will be surprised that macroeconomic instability will be the predominant note in a 2023 that presents an uncertain global scenario. Therefore, Spanish companies that buy their products and services outside the euro zone will have to be more attentive than ever next year to the evolution of its international markets.
It is estimated that more than half of international payment transactions are carried out without having contracted no risk coverage to protect yourself from currency market fluctuations. A very worrying fact if we take into account that around 70% of Spanish SMEs that operate in foreign trade do so by importing raw materials, components or manufactured products from countries outside the euro zone. “Immersed in this convulsive panorama, Spanish importing companies carry on their shoulders an unclear horizon that can impact their competitiveness if they are not farsighted”ensures Luis Azofra, country manager of iBanFirst in Spain.
In this sense, iBanFirst experts have analyzed the main challenges that 2023 proposes to importing companies in monetary matters:
Short-term global slowdown
The general consensus is that the new year will be marked by a slowdown, especially in the short term. An example of this is the fall in the prices of raw materials and maritime freight since the beginning of last summer. The reduction in demand should help reduce inflation in the medium term, in a volatile environment characterized by rising interest rates and persistent geopolitical instability.
Eurozone hit by the energy crisis and inflation
Dragged by this global context, the Eurozone will move between two problems that threaten to become chronic: a structural crisis of the energy model that stops the reduction of the electricity bill and an escalation of prices with no clear expiration date. The ECB forecasts slow growth of 0.9% for 2023, while inflation could soar to 12% at the start of the year. The Eurozone faces limited potential growth due to the energy crisis, which, according to our estimates, could cause a drop in EU GDP at the beginning of 2023.
A high dollar will make international purchases more expensive
The main factor that will condition Spanish imports is the rise in the dollar, which will continue trading in terms of parity with the euro and would end the year at 1.08.
In macroeconomic terms, two factors affect the prolonged decline of the euro against the US currency: the rate differential between the United States and the Eurozone and capital outflows motivated by investor concern due to the energy crisis in Europe. . This scenario will continue until mid-2023. From then on, if the war in Ukraine does not worsen, we will see a progressive revaluation of the euro at the end of 2023 around 1.16 dollars per euro.
The balance with China will be dragged by the American currency
If the weakness of the euro against the dollar affects imports from the United States, it also affects China, our main supplier with 11% of total purchases. 80% of the orders placed by our companies in the Asian giant are made in dollars, so the unfavorable fluctuation of the US currency will also affect Spanish imports in China.
Regarding the orders that are paid in extra-continental yuan, taking into account the Chinese policy of propping up the price of its currency, we see the EUR/CNH pair close to 8.00 yuan for each euro at the end of 2023, for the 7. 40 with which the year will begin. In terms of inflation, China is the only major world economy experiencing limited price increases, which will benefit companies purchasing products or services from there.
Economic turmoil threatens to devalue sterling
The United Kingdom, which contributes 2.4% of our imports, is another scenario to look at to trace the behavior of our companies’ purchases in 2023. Although the pound sterling has resisted the impact of Brexit well, new turbulence is on the horizon to the economy of the islands.
The high risk of a long recession combined with soaring inflation could lead to a depreciation of the British currency in the coming months and a drop in GDP of 2.1%, similar to that produced in the early 1990s. With this In mind, the pound can fall to 0.95 in the next three months to rise to 0.85 pounds for each euro at the end of 2023.