Spain Economic Forecast

Spain Economic Outlook

June 27, 2017

The economy remains comfortably on track to record another year of strong growth. Industrial production regained some traction in April following a weak March figure, while the services and manufacturing PMIs posted strong readings in both April and May. Employment in the manufacturing sector grew at a 19-year high in May, a testament to the improving dynamics observed in the labor market. In line with this, growth in Social Security affiliations retained its momentum in May, which points to a sharp reduction in the unemployment rate in Q2. An improving job market will continue to shore up private spending despite a slowdown in real income growth linked to higher inflation. Nonetheless, the panorama is less rosy in the political arena. Having successfully cleared a key hurdle last month after securing enough support in Congress to pass the long-delayed 2017 budget, the Rajoy Administration is now facing the Catalonian government’s plan to hold a new independence referendum on 1 October. The run-up to the referendum will weigh on Spanish bond premiums and risks putting economic policymaking on the backburner.

Spain Economy Data

Population (million)46.746.846.646.546.4
GDP per capita (EUR)22,90322,23322,01322,32323,170
GDP (EUR bn)1,0701,0401,0261,0371,076
Economic Growth (GDP, annual variation in %)-1.0-2.9-
Domestic Demand (annual variation in %)-3.1-5.1-
Consumption (annual variation in %)-2.4-3.6-
Investment (annual variation in %)-6.9-8.6-
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-0.8-6.4-
Industrial Production (annual variation in %)-1.4-6.6-
Retail Sales (annual variation in %)-5.8-7.0-
Unemployment Rate21.424.826.124.422.1
Fiscal Balance (% of GDP)-9.6-10.5-7.0-6.0-5.1
Public Debt (% of GDP)69.585.795.510099.8
Inflation Rate (HICP, annual variation in %, eop)
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)1.000.750.250.050.05
Stock Market (annual variation in %)-13.1-4.721.43.7-7.2
Exchange Rate (vs USD)1.301.321.381.211.09
Exchange Rate (vs USD, aop)1.391.291.331.331.11
Current Account (% of GDP)-3.3-
Current Account Balance (EUR bn)-34.0-2.415.611.314.7
Trade Balance (EUR billion)-46.0-31.0-16.0-24.0-24.0

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Spain Facts

Bond Yield1.672.52 %Jul 17
Exchange Rate1.160.96 %Jul 18
Stock Market10,525-1.19 %Jul 18

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Spain Economic Growth

June 27, 2017

The solid performance in exports and resilient dynamics in the domestic sector will ensure another year of strong growth. Nonetheless, economic activity will lose some steam towards the year‘s end due to a tighter fiscal stance and a gradual slowdown in consumer spending. Our panel of forecasters expects growth of 2.9% this year, which is up 0.2 percentage points from last month’s projection. Panelists see growth of 2.3% in 2018.

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