Foreign Trade and Internal Commerce

Spain’s balance of payments position in the early 1970s was such as to give rise to some complacency in the early stages of the economic recession which began to affect Europe towards the end of 1973. This was due in part to the high level of reserves of gold and foreign currency, which amounted to $6799 million at the end of 1973, and partly to the healthy inflow of payments from tourists and workers abroad on current account which, between 1970 and 1973, amply covered the chronic trade deficit. A country’s trading position is, however, a function of economic conditions prevailing externally as well as of the state of the domestic economy. Recent developments in the outside world have made heavy inroads on the strong balance of payments position enjoyed for several years by Spain. It can no longer be assumed that tourism and workers’ remittances from abroad will offset the trade deficit, especially as the latter has been rapidly inflated by the rise in the price of crude oil. This chapter looks at the chief components in the balance of payments, with the exception of foreign investment which was discussed in Chapter 3, and considers Spain’s position vis-à-vis her most important trading partner, the EEC. The second part of the chapter examines the structure of domestic trade and the two main methods of freight transport, road and rail.