Consumption in Spain

Spain - Consumption

Second estimate significantly revises down Q2 growth

A second estimate revealed that the economy grew 1.1% on a seasonally-adjusted quarter-on-quarter basis in Q2—a much softer increase than the 2.8% expansion reported in the preliminary release, but still contrasting the 0.6% contraction recorded in the first quarter. In year-on-year terms, the economy grew 17.5% in Q2, down from the preliminary estimate of a 19.8% rise but swinging from the 4.2% drop recorded in Q1, helped by a very low base effect.

The revision was predominantly driven by a more moderate increase in household spending, although it remained robust amid the lifting of restrictions, stronger consumer confidence and growing employment numbers. Private consumption rose 4.7% on a quarterly basis, down from the preliminary estimate of 6.6% but swinging from the 2.2% drop logged in Q1. Meanwhile, government consumption increased 0.9% from the prior quarter (Q1: +0.4% s.a. qoq), likely due to higher spending on healthcare. However, fixed investment declined 2.2% quarter-on-quarter as investment in tangible fixed assets, housing, and machinery and equipment fell, likely due to uncertainty over the government’s economic policies (Q1: +0.1% s.a. qoq).

Meanwhile, the external sector made a negative contribution to growth due to imports expanding at a sharper pace than exports. Exports of goods and services rose a timid 0.9% (Q1: +0.3% s.a. qoq) amid a still-subdued tourism industry. Imports, meanwhile, were up 4.2% in quarterly terms (Q1: +0.4% s.a. qoq), highlighting strengthening domestic demand.

Our panelists project the economy to grow 6.3% in 2021, which is down 0.1 percentage points from last month’s forecast, and 6.1% in 2022, which is unchanged from last month’s estimate.