Spain: Second estimate confirms robust growth in Q1
June 28, 2019
Economic activity accelerated at the start of the year, according to a second GDP estimate released by Spain’s Statistical Institute (INE) on 28 June. The economy grew a seasonally-adjusted 0.7% from the previous quarter in Q1, up a notch from the 0.6% expansion recorded in Q4 and confirming the preliminary reading.
Both domestic and external demand underpinned Q1’s expansion. After contracting 0.2% quarter-on-quarter in Q4, fixed investment recovered in Q1, expanding 1.4% in quarter-on-quarter terms on the back of a strong rebound in machinery and equipment investment. Moreover, private consumption kept pace, expanding 0.4% quarter-on-quarter (Q4: +0.4% quarter-on-quarter), as did government spending growth (Q1: +0.4% qoq; Q4: +0.4% qoq).
Meanwhile, despite muted export growth (Q1: +0.0% qoq; Q4: +0.7% qoq), the external sector also positively contributed to growth as import growth of goods and services dropped 0.3% on a quarterly basis (Q4: +0.0% qoq).
The economy is seen losing some steam this year amid the maturing business cycle. Healthy, albeit slowing, consumer spending should underpin the overall expansion, fueled by sustained job creation and gradually rising incomes. The main downside risks stem from political uncertainty, a cooling tourism sector, the possibility of a hard Brexit and global trade conflicts.