Spain Economic Forecast

Spain Economic Outlook

November 21, 2017

A preliminary estimate shows Spain’s economic momentum was intact in the third quarter, with GDP growth of 0.8% in quarter-on-quarter terms. While a breakdown by components is not yet available, survey-based and hard data both suggest overall growth was largely driven by domestic demand, which continues to benefit from ultra-loose monetary conditions and an improving labor market. Despite a rosy economic panorama, headlines continue to be dominated by the spat between pro-independence parties in Catalonia and the Spanish government. Madrid seized control of Catalonia in late October and called for regional elections to be held on 21 December. Pro-independence parties have already announced that they will participate in the elections, which are likely to keep political noise heightened in the months to come. Although it is too early to properly assess the economic effects, they have so far been limited. Employment growth was strong in October, while economic sentiment rose in the same month. One exception was the services PMI, which eased to a nine-month low amid reports that the 1 October vote on independence had delayed decision-making among clients.

Spain Economic Growth

The FocusEconomics panel projects the economy will grow 2.6% next year, which is unchanged from last month’s forecast. Political tensions aside, the domestic economy is likely to turn less supportive of growth as the pace of job creation slows and the ECB lifts interest rates, while a strong euro will drag on exports. For 2019, FocusEconomics panelists project the pace of economic expansion slowing to 2.2%.

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 Yield1.375.62 %Dec 06
Exchange Rate1.180.65 %Dec 06
Stock Market10,184-0.74 %Dec 06

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