Spain: Growth remains robust in Q3, despite slight moderation
November 26, 2015
After recording the largest expansion since Q1 2007 in the second quarter, Spain’s economy continued to show steady momentum in Q3. According to more complete data released by the National Statistics Office (INE) on 26 November, GDP expanded a seasonally-adjusted 0.8% in Q3 over the previous quarter, which matched the result reported in the 30 October advance estimate. While growth lost some steam from Q2’s 1.0% expansion, the performance was still solid for the Spanish economy and marked the ninth consecutive quarter of growth after over two years of recession.
Spain’s growth continues to be underpinned by robust domestic demand, which is offsetting the external sector’s drag. Renewed consumer confidence, rising employment and falling prices fueled private consumption to expand at the fastest pace since Q4 2007 in the third quarter, rising 1.0% (Q2: +0.9% quarter-on-quarter). The unemployment rate dropped to 21.2% in Q3, which, although still far above the Eurozone average, was below Q2’s 22.4% and marks the lowest level in over four years. Government consumption also picked up pace in the third quarter, rising from a 0.7% increase in Q2 to 0.9% in Q3. The rise was supported by higher tax receipts and a less tight fiscal position after years of austerity. However, fixed investment slowed to a year-low in Q3, rising only 1.1% (Q2: +2.4% qoq).
Meanwhile, the external sector held back growth in the third quarter, driving the economy’s loss of momentum. The net contribution swung to minus 0.7 percentage points from the plus 0.2 percentage points tallied in Q2. The result was driven by surging imports due to strong demand, which expanded 4.0% (Q2: +1.6% qoq), the highest rise since Q3 2009. Exports also picked up pace in the third quarter, accelerating from Q2’s 1.4% increase to a 2.8% rise. Spain’s exports have outperformed those of many of its regional peers and are striking given slowing demand from emerging markets. The strong performance was supported by low transportation costs—due to low oil prices—and robust growth in the tourism sector.
On an annual basis, GDP rose 3.4%, which matched the preliminary estimate and marked the strongest growth since Q4 2007 (Q2: +3.2% year-on-year). The economy’s strong growth figures throughout this year have led Spain to emerge as one of the fastest-growing major economies in the Eurozone.