Spain: Second estimate revises growth down in Q4 2019 but remains healthy
March 31, 2020
Economic activity held healthy and stable in the fourth quarter of 2019, according to a second GDP estimate released by the National Statistics Institute (INE) on 31 March. The economy grew a seasonally-adjusted 0.4% from the previous quarter in Q4, coming below the preliminary estimate’s 0.5% upturn and matching Q3’s expansion. In annual terms, growth inched down from 1.9% in Q3 to 1.8% in Q4. For 2019 as a whole, GDP growth came in at 2.0%, down from 2018’s 2.4% expansion and marking a five-year low.
Weaker domestic demand was offset by a stronger external sector in the fourth quarter. Exports of goods and services gained some momentum, despite the subdued global trading environment (Q4: +0.6% quarter-on-quarter; Q3: +0.1% qoq). Imports, on the other hand, slipped for the first time in the year, down 0.8% on a quarterly basis amid muted demand domestically (Q3: +1.4% qoq). Taken together, net trade made a sizeable contribution to overall growth, contrasting the deduction made in the prior quarter and propping up the overall turnout.
In contrast, anemic domestic demand weighed on activity. Private consumption slowed markedly, up a marginal 0.1% quarter-on-quarter (Q3: +0.8% qoq). Capital spending, meanwhile, declined the most in over six years amid a steep drop in machinery and equipment investment (Q4: -1.2% qoq; Q3: +1.1% qoq). Lastly, public spending gained some pace, growing 0.7% quarter-on-quarter (Q3: +0.6% qoq).
Looking ahead, the economy is projected to contract this year amid the coronavirus crisis and associated drastic measures implemented to contain it. Household consumption will suffer amid significant job losses; capital spending will be hit amid deteriorated sentiment; and exports will diminish as the all-important tourism sector comes to a halt and global demand is weakened.
Author: Javier Colato, Economist