La sagrada familia in Spain

Spain Economic Forecast

Spain Economic Outlook

Sequential GDP growth was roughly stable in Q2 from Q1. Falling inflation fostered a rebound in household spending, while higher housing investment fueled an acceleration in fixed investment. That said, the external sector dragged on growth. Moving to Q3, activity has likely softened amid rising interest rates, waning savings and global headwinds. Available data is downbeat: Reigniting headline and core inflation, coupled with falling manufacturing and services PMI readings, in July, bode ill for activity. In politics, a socialist was chosen as speaker by Congress in August with the support of regional parties. This suggests that the currently-ruling socialist party is likelier to form a government than the conservatives, who, as the narrow victor in July’s elections, will have a first shot at forming a government in September. If both parties fail to form a government, another election will be held in January.

Spain Inflation

Harmonized inflation rose to 2.1% in July from June’s 1.6%, while core inflation accelerated by 0.3 percentage points to 6.1%. Inflation will average significantly lower this year than in 2022, curbed by higher interest rates, cooling domestic demand and lower commodity prices. The evolution of the euro and commodity price swings are factors to watch.

This chart displays Economic Growth (GDP, annual variation in %) for Spain from 2013 to 2022.

Spain Economic Data

2018 2019 2020 2021 2022
Population (million) 46.7 47.1 47.4 47.4 47.6
GDP (EUR bn) 1,204 1,246 1,119 1,222 1,346
GDP per capita (EUR) 25,763 26,441 23,630 25,787 28,283
Economic Growth (Nominal GDP, ann. var. %) 3.6 3.5 -10.2 9.2 10.2
Economic Growth (GDP, ann. var. %) 2.3 2.0 -11.2 6.4 5.8
Domestic Demand (ann. var. %) 3.0 1.7 -9.2 6.7 2.9
Private Consumption (ann. var. %) 1.8 0.9 -12.4 7.2 4.8
Government Consumption (ann. var. %) 2.3 1.9 3.6 3.4 -0.2
Fixed Investment (ann. var. %) 6.3 4.5 -9.0 2.8 2.4
Exports (G&S, ann. var. %) 1.7 2.2 -20.1 13.5 15.2
Imports (G&S, ann. var. %) 3.9 1.3 -15.0 14.9 7.0
Industrial Production (ann. var. %) 0.4 0.6 -9.5 7.3 2.8
Retail Sales (ann. var. %) 0.8 2.4 -6.8 3.2 0.7
Home Prices Index (ann. var. %) 3.4 3.2 -1.1 2.1 5.0
Disposable Income (ann. var. %) 2.8 5.0 -2.0 3.1 3.6
Unemployment (% of active population, aop) 15.3 14.1 15.5 14.8 12.9
Fiscal Balance (% of GDP) -2.6 -3.1 -10.1 -6.9 -4.8
Public Debt (% of GDP) 100.4 98.2 120.4 118.3 113.2
Inflation (HICP, ann. var. %, eop) 1.2 0.8 -0.6 6.6 5.5
Inflation (HICP, ann. var. %, aop) 1.7 0.8 -0.3 3.0 8.3
Inflation (Core, ann. var. %, aop) 0.9 0.9 0.7 0.8 5.2
Inflation (PPI, ann. var. %, aop) 3.0 -0.4 -4.3 17.3 35.5
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
10-Year Bond Yield (%, eop) 1.42 0.45 0.04 0.56 3.63
Stock Market (var. of IBEX 35 %) -15.0 11.8 -15.5 7.9 -5.6
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Current Account Balance (EUR bn) 22.6 26.2 6.9 9.3 8.2
Current Account Balance (% of GDP) 1.9 2.1 0.6 0.8 0.6
Merchandise Trade Balance (EUR bn) -33.8 -32.0 -13.4 -26.2 -68.1
Foreign Direct Investment (EUR bn) 50.8 15.9 14.7 19.3 32.6

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