La sagrada familia in Spain

Spain Economic Forecast

Spain Economic Outlook

Sequential GDP growth cooled in Q3 from Q2. Slumping fixed investment and exports weighed on the economy. On the flipside, consumer spending strengthened on the back of falling inflation. Activity should lose further steam in Q4, due to higher interest rates and subdued external demand. In October, the manufacturing PMI fell further into contractionary terrain. Moreover, the labor market cooled and inflation rose, boding poorly for consumer spending. In politics, on 16 November, Pedro Sanchez was reappointed President by parliament after he reached a deal with Catalan separatist parties on amnesty for politicians in the region. The General Council of the Judiciary, which picks judges, warned that the deal threatened the rule of law, while the EU Commission expressed concerns. The ideological heterogeneity of its parliamentary support threatens to undermine the government’s stability.

Spain Inflation

Harmonized inflation rose to 3.5% in October from September’s 3.3%, mainly due to a softer fall in electricity prices. Meanwhile, core inflation dropped by 0.6 percentage points to 5.2%. Headline inflation will average lower next year than this, on higher interest rates and lower commodity prices. The evolution of the euro and commodity prices 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 47.3 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 25,824 28,276
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. %) 2.9 5.1 -2.1 4.5 4.1
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 -6.7 -4.7
Public Debt (% of GDP) 100.4 98.2 120.3 116.8 111.6
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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