Spain Economic Forecast

Spain Economic Outlook

February 26, 2019

The economy gained steam in the final stretch of 2018 as quarterly growth in Q4 picked up a notch from a solid Q3 outturn, sharply contrasting the mediocre performance in the Eurozone overall. The pick-up was largely underpinned by a strong rebound in exports and multi-year high growth in public spending. Slower private consumption and a contraction in fixed investment weighed on the headline figure, however. Meanwhile, available data suggests that the solid momentum carried over into 2019: In January, the composite PMI hit a seven-month high, largely reflecting improved business conditions in the manufacturing industry, while economic sentiment bounced back from an over two-year low. In the political arena, on 15 February, Prime Minister Pedro Sánchez called a snap general election for 28 April after Catalan pro-independence parties, which had backed his government previously, joined with the opposition to reject his draft 2019 budget two days earlier.

Spain Economic Growth

Growth is seen slowing this year as the current economic cycle matures. Private consumption is set to ease as employment growth slows and wage gains moderate, while investment activity could be dampened by tightening financial conditions. In addition, the vital tourism industry has reached its peak and is set to cool going forward, posing a major headwind to job creation and economic activity overall. Heightened political uncertainty over the outcome of the general election and its repercussions on economic policy also cloud the outlook. FocusEconomics panelists project growth of 2.2% in 2019, which is unchanged from last month’s estimate, and 1.8% in 2020.

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Spain Facts

ValueChangeDate
Bond Yield1.135.62 %Mar 20
Exchange Rate1.140.65 %Mar 20
Stock Market9,406-0.74 %Mar 20

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