Spain Economic Forecast

Spain Economic Outlook

May 28, 2019

Preliminary estimates showed that growth quickened to an over one-year high in Q1, contrasting the lackluster performance in the Eurozone overall. The acceleration was largely driven by a solid rebound in fixed investment and a positive contribution from the external sector. Turning to Q2, however, available data has not been as upbeat. In April, the composite PMI declined notably while economic sentiment dipped to an over two-and-a-half year low, indicating softer dynamics in the private-sector economy. On the political front, the investiture vote for Prime Minister Pedro Sánchez is likely to take place in July after his Socialist Party (PSOE) won the 28 April general election. Since then, the PSOE has consolidated its position as the primary political force by scoring important wins in the municipal, regional and EU elections on 26 May. That said, the vote at the subnational level was fragmented, setting the stage for complicated negotiations to form governments at both the local and national stage.

Spain Economic Growth

The economy is expected to lose some traction this year as the business cycle matures. Domestic demand is seen driving the overall expansion, particularly private consumption amid sustained employment growth and gradually rising wages. The cooling all-important tourism industry, policy uncertainty and elevated global trade tensions pose downside risks to the outlook. FocusEconomics panelists project growth of 2.2% in 2019, which is unchanged from last month’s forecast, and 1.8% in 2020.

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Spain Facts

Bond Yield0.575.62 %Jun 12
Exchange Rate1.130.65 %Jun 13
Stock Market9,247-0.74 %Jun 13

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