What challenges will the Valencian economy face in the foreign market in 2022?

joypaul852

The challenges and uncertainties in international markets derived in part from the health crisis continue. With a current scenario of global shortages of raw materials, increases in energy costs and the breakdown of the supply chain, the Valencian economy is preparing to face economic challenges both nationally and in international markets, as well as This has been reflected in the recent report 'Valencian foreign trade in the face of a new international scenario in 2022' presented by the territorial director of CaixaBank in the Valencian Community, Xicu Costa , and the president of the Valencia Chamber, José Vicente Morata.

According to the study of these two entities, in the current international scenario, imbalances can be seen between the supply and demand of goods and the breakdown of the supply chain and shortages of raw Phone Number List materials and other semi-manufactures, which has resulted in an intense increase of prices, both in maritime freight with Asia, and in the accelerated increase in energy prices, above pre-pandemic levels.

Current economic scenario
All these changes are affecting exporting companies; not only Valencian, but most countries and affect, above all, supply chains; to the production cost structure and the priorities of the supplier and destination markets.

Companies face a rapidly changing scenario; which forces them to adopt flexible policies that allow them to adapt to the new conditions and trends that mark international trade exchanges. But it also opens up the possibility of taking advantage of the new market niches and opportunities that arise with these changes.

International challenges and opportunities
The rapid recovery of demand, starting in the second half of 2020; has translated into a recovery of most of the products exported by Valencian companies.



Agri-food products will maintain their upward path; especially in the European and North American market, by increasing its weight in the shopping basket.
The pandemic has changed consumer habits in developed countries, which implies greater demand for goods and services related to habitat; the comfort; sports and health, but also greater demand for electronic products; for both leisure and work.
Faced with an automobile sector in temporary decline (both due to demand and the impossibility of production due to the lack of chips), the market for electric transport elements and greater urban mobility is expanding.
It is also worth highlighting the opportunity for metal semi-manufactures, those destined for the construction sector, the chemical sector, as alternative suppliers to those from Asian countries. Its growing competitiveness is based not on price, but, above all, on availability, geographical proximity and less uncertainty in supply.
Finally, the notable increase in production costs that companies are suffering worldwide - for raw materials, energy and transport - could negatively affect medium-term investment plans, and, therefore, exports of goods. of equipment.
Among the main conclusions of the study, the following stand out:
International supply chains and companies' cost structures are being significantly affected, which is translating into a greater propensity for shortening supply chains, trade diversion, changes in stock policies ( increasing stocks versus 'just in time') and diversification of suppliers in closer markets. This situation represents an increase in opportunities in the European market; highlighting what are already our main markets: France, Germany, Portugal, Belgium and the Netherlands. Turkey also stands out, which is positioning itself in international trade as an alternative to Asian markets.
Changes in consumer habits - greater spending on housing, the use of 'ecommerce', digitalization and greater concern for sustainability - offer good opportunities in markets with high purchasing power: northern European countries, the United States, Canada and Middle East.

The proximity of the North African markets (Tunisia, Morocco or Egypt) and West Africa represents a cost advantage for Valencian companies; both as destination markets and as input suppliers.
The high costs of freight with Asia and; Uncertainty in the supply of orders (whether for purchase or sale) will have a negative impact on commercial exchanges. However, China and India will continue to be markets with high growth potential for medium-high value added products.