La sagrada familia in Spain

Spain Economic Forecast

Spain Economic Outlook

Sequential GDP growth was nearly stable in Q2 from Q1, as stronger domestic demand largely offset a weaker external sector. Momentum has seemingly weakened in the current quarter, restrained by tighter financing conditions and global headwinds. The manufacturing PMI moved further into contractionary terrain in July-August, while the services PMI followed suit in August in a testament to widening economic weakness. In July-August, inflation rose from June’s trough, which likely contributed to anemic retail sales growth in July. More positively, foreign tourists were more numerous in July than in pre-Covid July 2019. In politics, center-left incumbent President Sanchez appears set to reach a parliamentary majority following July’s general election, though separatist leader Puigdemont has demanded an amnesty for Catalan separatists as his price for supporting Sanchez’s government.

Spain Inflation

Harmonized inflation rose to 2.4% in August from July’s 2.1% due to higher energy prices. Meanwhile, core inflation dipped by 0.1 percentage points to 6.1%. Inflation will average notably 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. %) 2.9 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 -6.9 -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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