The economy holds up. The slowdown predicted for the second part of the year is indeed here, but it is coming in a softer, more gradual way than expected. In the third quarter, GDP rose by 0.3%, which is one tenth less than the increase in the previous quarter and, yes, three tenths below the first of the year. So, we begin to see the picture of a 2023 that started strong in growth and that has been gradually moderating the pace, but which, barring a capital scare, is guaranteed an annual GDP of around 2.4%.
The key to growth in the third quarter is consumption, according to data published yesterday by the National Institute of Statistics (INE). Specifically, household consumption increased by 1.4% during this quarter. They are 0.5 points more than in the previous period and entail chaining together three consecutive quarters on the rise.
Consumption continues to grow against all odds, that is, despite inflation and rate hikes, and has taken over from exports, which were the engine of the economy during the beginning of the year, but which they have been losing strength following the slowdown in economic activity outside the Spanish borders.
“The GDP figure is a little better than expected, and probably confirms that Spain continues to grow above the Eurozone average. It is growth almost exclusively driven by consumption, especially by households, which are benefiting from an improvement in their disposable income given the drop in inflation”, says Ángel Talavera, from Oxford Economics.
How can this resilience of household consumption be explained? Well, based on two pillars: wages and employment. On the one hand, the data from Thursday’s Labor Force Survey are significant and show a new record number of people employed. On the other hand, wages are growing above inflation. “To the extent that consumption holds up well, it shows that the financial position of families is less strained”, says Oriol Aspachs, from CaixaBank Research. According to data from this entity, wages grew by 4.6% in September, well above inflation, which explains the recovery of families’ purchasing power.
“We calculated that there was room for consumption to grow during the second half of the year and it is being confirmed”, points out María Jesús Fuentes, from Funcas. As for the whole of 2023, Funcas maintains its calculations. “Our forecast was 2.4% and we maintain it. This would be achieved with a growth of 0.2% in the fourth quarter”, explains Fuentes.
If the consumption data are the most positive, on the other hand, investment weakens, with a setback of 0.8%, especially with a 2.2% fall in investment in construction.
In the foreign sector, both exports and imports show a significant drop, and have already accumulated two consecutive quarters of decline, a fact that shows the weakness of global and especially European demand.
The data published yesterday places GDP this quarter 2.1% above pre-pandemic levels. After the upward revision that the INE made in September of accounting in Spain for the period 2020-2022, the recovery of the level at the end of 2019 was anticipated in the summer of last year, and now it is already two points above. In yesterday’s figures, the INE also revised the growth in the second quarter down by one tenth, so that growth is more staggered, from more to less, with growth of 0.6%, 0.4 % and 0.3% respectively in the first three quarters of the year.
It is true that in the last few days the prognoses pointing to minimal growth in this third quarter had been lavished, even the daily GDP indicator that Airef works with came to indicate a contraction of 0.2% . However, in the end the INE data show a much more limited growth moderation and add up to a GDP increase of 0.3%.
According to the Ministry of Economy, this data confirms “the differential growth of the Spanish economy with respect to the main states of the euro zone and is in line with the macroeconomic forecasts included in the budget plan”.
For its part, the CEOE warns that the rise in interest rates and the geopolitical context may slow down activity and employment in the coming months, but despite this, it maintains its forecast of a growth of 2.4% in 2023.
