Spain Economic Forecast

Spain Economic Outlook

September 23, 2019

Spain is set to hold a general election on 10 November, as the ruling Socialist Party failed to secure the backing of parliament to form a new government. The Socialists needed the support of Podemos to win a confidence vote, but the far-left party announced it would not do so unless it was admitted into a coalition government, which acting Prime Minister Sánchez rejected. Political uncertainty therefore mounts at a time when the economy is showing increasing signs of weakness. After holding steady in Q2, economic activity likely remained stable in Q3. In July, the industrial sector remained weak, and in August, the manufacturing PMI remained entrenched in contractionary terrain. Moreover, in July the number tourist arrivals contracted. Compounding matters, and despite some improvement in the services PMI in August, sinking consumer confidence suggests households' mood remains cautious.

Spain Economic Growth

Growth should ease this year amid a weaker domestic economy and a subdued external backdrop. The economy is expected to shift into a further lower gear in 2020, as softer employment gains limit household spending growth, investment activity softens further and the tourist sector loses traction. Political uncertainty and the lack of pro-market reforms pose downside risks. FocusEconomics panelists expect growth of 2.2% in 2019 and 1.8% in 2020, which is unchanged from last month’s forecast.

Spain Economy Data

Population (million)46.646.546.446.446.4
GDP per capita (EUR)22,01422,34023,29624,11125,132
GDP (EUR bn)1,0261,0381,0811,1191,166
Economic Growth (GDP, annual variation in %)-
Domestic Demand (annual variation in %)-
Consumption (annual variation in %)-
Investment (annual variation in %)-
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)-
Unemployment Rate26.124.422.119.617.2
Fiscal Balance (% of GDP)-7.0-6.0-5.3-4.5-3.1
Public Debt (% of GDP)95.510099.399.098.1
Inflation Rate (HICP, annual variation in %, eop)0.3-1.1-
Inflation Rate (HICP, annual variation in %)1.5-0.2-0.6-0.32.0
Inflation (PPI, annual variation in %)0.6-1.3-2.1-3.14.4
Policy Interest Rate (%)-  -  -  -  -  
Stock Market (annual variation in %)21.43.7-7.2-2.07.4
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)
Current Account Balance (EUR bn)15.611.212.625.221.5
Trade Balance (EUR billion)-16.0-24.5-24.2-18.8-24.7

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Spain Facts

Bond Yield0.075.62 %Sep 03
Exchange Rate1.100.65 %Sep 04
Stock Market8,857-0.74 %Sep 04

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