The Spanish economy has started the year on a good and surprising positive note. A growth from January to March of 0.6%, which is one tenth more than the advanced data, which allows it to finally, four years later, recover the pre-pandemic GDP level. It was expected to achieve this in the second quarter of the year, but the slight upward correction provided yesterday by the National Statistics Institute (INE) has allowed it to achieve this now. For the minimum, certainly; GDP is less than a tenth higher than in the last quarter of 2019, exactly 0.06%, and it has taken four years to get here.
Spain is one of the last European countries to recover this level, which its partners have achieved a long time ago. The dependence on tourism, a sector heavily punished by the restrictions on mobility, is particularly expensive here.
In any case, the good first quarter of this year, with a GDP increase of 0.6%, follows the final three months of 2022 better than what was calculated so far. The INE has revised its numbers again and has raised the increase by a tenth this period to leave it at 0.5%. This dreaded technical recession by the end of 2022 has been a total miscalculation.
After examining the composition of growth in the first three months of the year, it highlights that much depends on exports, both of tourism and non-tourism goods, which have increased by 5.7%, which is a big jump in compared to the fall they had in the previous quarter. A second driving factor has been investment, with an increase of 1.8%. On the other hand, household consumption remains sluggish. It fell by 1.3%, chaining two consecutive downward periods. If we add these past two quarters, the drop in household consumption is close to 3%. Inflation is taking effect, and purchasing power is suffering. Perhaps the increase in interest rates is also noticeable here, but experts believe that this element will have more impact in the second part of the year, and that what it exerts at the moment is limited.
“What keeps the Spanish economy going are exports, and its general good evolution stands out, and it’s not just tourism, tourism has an important weight, but non-tourist services and goods are also pushing. It’s an evolution that we don’t see in the countries around us”, comments Oriol Aspachs, from CaixaBank Research. Good news, but accompanied by a nuance. Given that the economies we export to are slowing down, this may also have an impact on Spanish in the coming months.
For her part, María Jesús Fernández, from Funcas, highlights the drop in consumption. “We expected that the second part of the year would see the bulk of the adjustment in consumption, but it seems that this adjustment is already taking place, that it has been anticipated”, says Fernández.
With these data, the Spanish economy recovers pre-pandemic levels, something highlighted by the Ministry of Economy, and they add that “growth accelerated in the first quarter of the year, thanks to the contribution of national demand and above all of the foreign sector to improve the competitiveness of Spanish companies”.
These data from the INE support the upward revisions to the growth of the Spanish economy that all the bodies are making. The latest was the Bank of Spain, which on Monday raised its growth forecast for the year to 2.3%, two tenths above the Spanish Government’s estimate.
