Spain: Economy expands modestly in Q4 on stronger exports
February 16, 2011
In the fourth quarter, GDP expanded 0.2% over the previous quarter in seasonally adjusted terms, according to more complete data released by the National Statistics Office (INE) on 16 February, which confirmed the advance estimate published on 11 February. The reading came in above the flat reading recorded in the third quarter. On an annual basis, the economy expanded 0.6%, well above the 0.2% increase registered in the third quarter. However, for the full year 2010, the economy shrunk 0.1%, which followed the 3.7% contraction recorded in 2009 and was well below the Euro area average for the first time in over a decade. The expansion in the fourth quarter was driven by an improvement in the external sector, as domestic demand stagnated. Private consumption expanded 0.3% over the previous quarter (Q3: -1.0% quarter-on-quarter). However, government expenditure dragged on total consumption as austerity measures restricted public spending. Gross fixed investment contracted 1.4% over the previous quarter (Q3: -2.8% qoq). The net contribution to overall economic growth from the external improved, as exports of good and services increased 3.9% over the third quarter while imports rose 1.6%. At the sector level, the third quarter reading reflected positive growth in the agriculture, services, energy and industry sectors, while activity within the construction sector contracted over the previous quarter. The Central Bank anticipates the economy to return to growth in 2011 with a 0.8% expansion.