GDP per capita in Spain

Spain - GDP per capita (Euros)

Economy rebounds at slightly softer pace than previously estimated in Q3

A second reading of national accounts data showed that the economy expanded at a slightly softer pace than originally estimated in the third quarter, with GDP growth revised down to 16.4% on a seasonally-adjusted quarter-on-quarter basis (previously reported: +16.7% s.a. qoq). That said, the reading still marked a record high and contrasted the steep 17.8% contraction seen in the second quarter. However, output was still down a revised 9.0% year-on-year (previously reported: -8.7% yoy)

The slight downward revision to growth came despite stronger-than-previously-estimated domestic demand. Consumer spending jumped 20.8% over the prior quarter in Q3 (previously reported: +20.7% s.a. qoq), swinging from Q2’s 20.7% nosedive as businesses and shops reopened. In addition, fixed investment grew at a stronger rate of 21.7% compared to the previously reported 19.9% increase (Q2: -20.6%), buoyed by recovering residential and capital goods investment. Lastly, public consumption expanded 1.2% (previously reported: +1.1%), up from the second quarter’s 0.3% increase.

The contribution of the external sector, however, was weaker than originally estimated, weighing on the overall reading. Exports of goods and services expanded 29.9% over the prior quarter in Q3, down from the previously reported 34.3% surge but still swinging from the second quarter’s 33.1% contraction. Foreign demand was buttressed by the economic recovery in the EU and returning tourists. Imports, meanwhile, expanded 27.0% over the previous quarter in Q3, down slightly from the previously reported 28.4% increase (Q2: -28.5% s.a. qoq). Firming imports were driven by strengthening domestic demand.

Looking ahead, the economy is forecast to return to growth in 2021, bouncing back from the pandemic-induced contraction in 2020. That said, the balance of risks remains tilted to the downside due to potential permanent damage to the vital tourism sector, elevated unemployment and a possible prolongation of the pandemic. Rising public debt levels pose a further downside risk.

The Central Bank forecasts the economy to grow 4.1%–7.3% in 2021. FocusEconomics Consensus Forecast panelists, meanwhile, project that GDP will expand 6.6% in 2021, which is down 0.4 percentage points from last month’s forecast. In 2022, panelists see the economy growing 4.2%.