Spain GDP Q3 2021


Spain: Economy continues to grow in Q3 but surprises markets on the downside

October 29, 2021

According to a preliminary reading, GDP rose 2.0% on a seasonally-adjusted quarter-on-quarter basis in the third quarter, undershooting market expectations of a 2.7% increase and following the 1.1% rise recorded in Q2. In year-on-year terms, the economy grew 2.7% in Q3, moderating significantly from the 17.5% jump recorded in Q2, although it had benefited from a very low base effect.

A notable improvement in foreign demand drove the third quarter’s reading. Exports of goods and services rose a strong 6.4% in seasonally-adjusted quarter-on-quarter terms (Q2: +0.9% s.a. qoq) thanks to a robust hospitality sector, which benefited from rising tourist inflows. Imports, meanwhile, were up a timid 0.7% in quarterly terms (Q2: +4.2% s.a. qoq), highlighting softening domestic activity.

Indeed, domestic demand weakened considerably in Q3. Private spending dropped 0.5% on a quarterly basis, swinging from the 4.7% increase logged in Q2, likely due to rising inflation and soaring energy prices eating into consumers’ pockets. Meanwhile, government consumption increased 0.1% from the prior quarter (Q2: +0.9% s.a. qoq), while fixed investment rose 1.3% as investment in tangible fixed assets, housing, and machinery and equipment rebounded (Q2: -2.2% s.a. qoq).

The INE will release a second GDP estimate for Q3 on 23 December.

Our panelists project the economy to grow 6.0% in 2022, which is unchanged from last month’s forecast, and 3.1% in 2023.

Author: Massimo Bassetti, Senior Economist

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Spain GDP Chart

Spain GDP Q3  2021

Note: Quarter-on-quarter changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: National Statistics Institute (INE) and FocusEconomics calculations.

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