The engine of the economy does not catch a cold. It continues to move forward albeit at a slower pace. In the third quarter, Spanish GDP increased by 0.3%, thus confirming the advanced data, and in the final stretch of the year it will probably grow at a similar rate. Very different from the strong start in 2023, which will allow it to grow annually by around 2.4%, but it remains a better performance than that of its European neighbors, mired in economic anemia.
The key to this increase in activity continues to be consumption, with households driving growth with a rise of 1.4% compared to the previous quarter. Here, the effects of good employment performance and the gain in families’ purchasing power can be seen, thanks to both the moderation of inflation and the increase in wages. A combination of factors that has allowed families to spend more during the summer.
At the other extreme, the fall in exports is confirmed, which, particularly punished by the economic weakness of the European Union, the priority destination of our products, are losing strength, and are down 4.1% compared to the previous quarter. Imports also decrease, by 2.9%.
From the Ministry of Economy, they emphasize that “the Spanish economy maintains its dynamism”, with differential growth compared to the euro zone, which continues to be mired in the stagnation of activity. Germany is particularly outperformed, with an economy that is headed for contraction this year. This difference is partly explained by Germany’s higher dependence on manufacturing, which pays for the economic slowdown, while in Spain there is less manufacturing and tourism remains strong. Not only Germany, France also contracted this third quarter, while Italy grew a meager 0.1%.
From Economia they also point out that growth starts from the push of national demand, with private consumption as the main actor, while on the supply side the sectors that contribute the most to activity are the manufacturing industry and services .
For his part, Raymond Torres, from Funcas, points out that the deceleration is lower than might have been expected, if we add the brake on exports and the effects derived from the rise in interest rates. “The labor market holds up and employment continues to progress, although less than in the spring, and the recovery of the purchasing power of families is achieved thanks to the deflation of energy prices and occasional phenomena of recovery of purchasing power in agreements groups”, he says.
The less prosperous data is the investment outlook, which falls one point compared to the previous quarter. And this despite the investment entailed by European funds, although it is true that the big impact of the Next Generation is expected to take place in 2024 and 2025, according to Bank of Spain calculations. “The evolution of investment is worrying”, says Torres, who highlights how investment in capital goods is still below pre-pandemic levels.
Looking ahead to next year, the Bank of Spain indicated this week that its forecast is a growth of 1.6%, a considerable drop from 2.4% this year. It is a perspective that feeds the data known today. That is, a fourth quarter of this year in which growth will probably also be around 0.3%, and which may slow down a little more in the first months of 2024. The second part of next year should be better. An important part of the evolution will depend on the monetary policy of the ECB: from when it will start to relax it and lower rates.
