Spain: Economy stagnates in third quarter as private consumption contracts
November 16, 2011
In the third quarter, GDP was unchanged over the previous quarter in seasonally adjusted terms, according to more complete data released by the National Statistics Office (INE) on 16 November, which confirmed the advance estimate published on 11 November. The reading was down from the 0.2% expansion recorded in the second quarter, but matched market expectations. On an annual basis, the economy expanded 0.8% in the third quarter, which was unchanged from the 0.8% increase registered in the previous quarter. The economy stagnated in the third quarter as a stronger external sector could not compensate for a further deterioration in domestic demand. Private consumption fell 0.1% (Q2: +0.2% quarter-on-quarter) and government expenditure contracted 1.1% (Q2: -1.3% qoq), while gross fixed investment declined a softer 0.6% over the previous quarter (Q2: -1.2% qoq). Exports of goods and services grew 3.1% (Q2: -0.2% qoq) while imports increased 2.8% (Q2: -2.2% qoq), driving up the net contribution from the external sector. The Bank of Spain anticipates that the economy will expand 0.8% this year, which is in line with the government's forecast. For the next year, the Bank expects economic activity to accelerate further to 1.5% while the government expects growth of 2.5%.