Spain Economic Forecast

Spain Economic Outlook

January 30, 2018

The economy likely made significant progress in the final stretch of 2017 in spite of heightened political noise. High-frequency indicators for the quarter suggest that growth was buttressed by favorable external conditions and resilient consumer spending amid an improving labor market and low borrowing costs. Survey-based data also paints a bright economic picture early this year, with December’s services and manufacturing PMIs pointing to solid activity in Q1 2018. On the back of an upbeat economic panorama, improving fiscal metrics and ample private deleveraging, on 19 January Fitch Ratings upgraded Spain’s long-term foreign currency rating to A- from BBB+. In the political arena, however, political uncertainty persisted through January. On 17 January, Catalonia’s parliament elected a new board with an independentist president and majority. Secessionist parties have also agreed to re-elect Carles Puigdemont—who fled to Belgium in October—as president of the region, but constitutional hurdles impede the way for his election.

Spain Economic Growth

Economic growth will continue to moderate but remain resilient through 2018 as employment growth slows and fiscal constraints continue to hamper public sector activities. In addition, political uncertainty stemming from Catalonia’s attempt at gaining independence will continue to weigh on the outlook. The FocusEconomics panel sees growth at 2.7% next year, up 0.1 percentage points from last month’s estimate. For 2019, our panelists see the pace of economic expansion slowing further, to 2.3%.

Spain Economy Data

Population (million)46.846.646.546.446.3
GDP per capita (EUR)22,23322,01322,32323,17724,045
GDP (EUR bn)1,0401,0261,0371,0761,114
Economic Growth (GDP, annual variation in %)-2.9-
Domestic Demand (annual variation in %)-5.1-
Consumption (annual variation in %)-3.6-
Investment (annual variation in %)-8.6-
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-6.4-
Industrial Production (annual variation in %)-6.6-
Retail Sales (annual variation in %)-7.0-
Unemployment Rate24.826.124.422.119.6
Fiscal Balance (% of GDP)-10.5-7.0-6.0-5.1-4.5
Public Debt (% of GDP)85.795.510099.899.4
Inflation Rate (HICP, annual variation in %, eop)3.00.3-1.1-0.11.4
Inflation Rate (HICP, annual variation in %)2.41.5-0.2-0.6-0.3
Inflation (PPI, annual variation in %)3.80.6-1.3-  -  
Policy Interest Rate (%)0.750.250.05-  -  
Stock Market (annual variation in %)-4.721.43.7-7.2-2.0
Exchange Rate (vs USD)1.321.381.21-  -  
Exchange Rate (vs USD, aop)1.291.331.33-  -  
Current Account (% of GDP)-
Current Account Balance (EUR bn)-2.415.611.314.721.5
Trade Balance (EUR billion)-31.0-16.0-24.0-24.2-18.8

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Spain Facts

Bond Yield1.565.62 %Feb 22
Exchange Rate1.230.65 %Feb 22
Stock Market9,877-0.74 %Feb 22

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