Spanish economy failing to meet growth forecasts

The Spanish economy is losing momentum sooner and more intensely than expected, according to new figures released by the National Statistics Institute (INE).

The Spanish economy grew 2.4% in 2018, rather than the expected 2.6%

Although economic output continues to double the growth rates of the euro zone, the pace of that growth is slowing down. First- and second-quarter growth were both around 0.5%, making it difficult for the economy to expand at a rate of 2.2% in 2019, as the Spanish government had forecast.

The numbers also show that the Spanish economy grew 2.4% in 2018, rather than the expected 2.6%. The revised figures are part of periodic statistical reviews of the annual national accounts carried out by the INE.

This means that 2019 growth will be below the analysts’ forecasts. First-quarter growth was 0.5%, two-tenths of a point below the earlier estimate, and 0.48% in the second quarter.

“With these new figures, the 2.2% growth forecast made earlier by [think tank] Funcas is now outdated. The real number will most likely be somewhere between 2% and 2.1%,” said Funcas analyst María Jesús Fernández. “The review of the 2019 first-quarter figures will be confirmed by the INE on September 30.”

Summer figures showed a slump in employment, with industry and exports affected by global uncertainty despite steady consumption levels. The latest INE data also shows that household spending is slowing down. Between April and June, quarterly consumption remained stuck at 0.02%, while investment retreated 0.15%.

Spain’s GDP is €6 billion lower than the previous calculation

As for 2018, the revised figures show that household consumption grew 1.8%, while business investment expanded 6.1% and government spending was up 2.1%.

The statistics bureau has revised figures for Spain’s main economic aggregates going back to 1995, and until 2002 the new numbers are mostly higher than originally calculated. After that, the reviewed numbers have been mostly corrected downward. The average impact on the accounts was -0.4% for the 24 years under review, said the INE.

The message is that Spaniards are producing and earning slightly less than previously reported. Right now, GDP is €6 billion lower than the previous calculation, and now stands at €1.202 trillion at the close of 2018 compared with €1.208 trillion.

English version by Susana Urra.