Spain: Second estimate confirms healthy growth in Q3
December 30, 2019
Economic activity remained steady and healthy in the third quarter, according to a second GDP estimate released by the National Statistics Institute (INE) on 30 December. The economy grew a seasonally-adjusted 0.4% from the previous quarter in Q3, matching both the preliminary estimate and Q2’s expansion. In annual terms, growth ticked down from 2.0% in Q2 to 1.9% in Q3, the softest increase in five years.
Sturdy domestic demand propped up the third-quarter reading. Private consumption gathered momentum, growing 0.8% quarter-on-quarter—the strongest expansion in over two years—amid sustained healthy gains in employment (Q2: +0.1% quarter-on-quarter). Additionally, fixed investment recovered in Q3, rising 1.7% on a quarterly basis (Q2: -0.2% qoq) on the back of a strong rebound in machinery and equipment investment. For its part, public spending growth also quickened (Q3: +0.6% qoq; Q2: +0.4% qoq).
In contrast, the external sector’s performance was subdued in Q3. Exports of goods and services stagnated from the prior quarter after growing a strong 1.5% in Q2. Imports, meanwhile, picked up pace amid firm demand dynamics at home, rising 1.8% quarter-on-quarter (Q2: +1.1% qoq). Taken together, net trade significantly subtracted from overall growth after having contributed positively to Q2’s showing.
Looking ahead, the economy is projected to lose traction in 2020, in part due to a less supportive external environment. This includes soft Eurozone activity; a more subdued global economy, weighed on mainly by the U.S.-China trade dispute; and a cooling tourism industry—a major contributor to growth and employment. Increased political uncertainty domestically also dampens the outlook.
Author: Javier Colato, Economist