Spain Economic Forecast

Spain Economic Outlook

December 23, 2021

Activity should have expanded at a decent pace in Q4, amid a comparatively favorable health situation. PMI readings for October and November showed sustained expansions in the manufacturing and services sectors, while the labor market continued to recover in the same period. That said, both retail sales and industrial production dropped in October—the latter likely hit by global supply constraints—which, coupled with weakening consumer sentiment and soaring inflation, calls for caution. Moreover, a rising volume of renegotiated loans in October points to the scars left by the pandemic on the production sector. Meanwhile, the stock of public debt remained above 120% of GDP in Q3, and both the European Commission and the independent fiscal authority warned the government to stick to prudent fiscal policies, while the OECD and the IMF recently criticized the pension reform for making the system less sustainable.

Spain Economic Growth

The economy should expand at a faster rate next year, after 2021’s limited recovery. Spending of accumulated savings and EU funds amid loose fiscal and monetary policies should provide temporary stimulus, although still-elevated inflation and protracted supply bottlenecks could constrain growth. Troubled fiscal metrics and a likely tightening of labor market rules pose downside risks. Our panelists downgraded the outlook again this month and now project the economy to grow 5.6% in 2022, which is down 0.3 percentage points from last month’s forecast, and 3.5% in 2023.

Spain Economy Data

2015 2016 2017 2018 2019
Population (million)46.446.446.446.446.7
GDP per capita (EUR)23,21924,00625,03625,88226,692
GDP (EUR bn)1,0781,1141,1621,2021,245
Economic Growth (GDP, annual variation in %)3.83.02.92.42.0
Domestic Demand (annual variation in %)4.12.13.12.71.5
Consumption (annual variation in %)2.92.63.01.81.1
Investment (annual variation in %)4.92.45.95.31.8
Exports (G&S, annual variation in %)4.35.45.62.22.6
Imports (G&S, annual variation in %)5.12.66.63.31.2
Industrial Production (annual variation in %)3.21.93.20.30.7
Retail Sales (annual variation in %)4.23.90.70.82.4
Unemployment Rate22.119.617.215.314.1
Fiscal Balance (% of GDP)-5.2-4.3-3.0-2.5-2.8
Public Debt (% of GDP)99.399.298.697.695.5
Inflation Rate (HICP, annual variation in %, eop)-0.11.41.21.20.9
Inflation Rate (HICP, annual variation in %)-0.6-0.32.01.70.8
Inflation (PPI, annual variation in %)-2.1-3.14.43.0-0.4
Policy Interest Rate (%)-  -  -  -  -  
Stock Market (annual variation in %)-7.2-2.07.4-15.011.8
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)2.03.22.71.92.0
Current Account Balance (EUR bn)21.835.431.123.324.9
Trade Balance (EUR billion)-24.2-18.8-24.7-33.8-32.0

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Spain Facts

Value Change Date
Bond Yield0.465.62 %Dec 31
Exchange Rate1.120.65 %Dec 31

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