Spain Economic Forecast

Spain Economic Outlook

December 22, 2017

The economy has stood its ground in the fourth quarter, despite heightened uncertainty linked to the political environment in Catalonia. Incoming data shows that the negative economic impact stemming from the crisis has been limited to the region, with growth momentum largely intact in the wider Spanish economy. In November, employment growth as measured by Social Security affiliations remained buoyant, the Economic Sentiment Indicator reached its highest print in nearly two years and the composite PMI inched up on upbeat operating conditions among manufacturers. Despite the resilient economic picture, the political impasse is unlikely to be resolved soon, following snap elections in Catalonia on 21 December. The vote yielded a similar result than in the previous election in 2015, with the three secessionist parties obtaining a narrow majority in the regional parliament. The results are bruising for the Spanish government, which had called the early election in the hopes of depriving the secessionists of their ruling majority. Heightened uncertainty in Catalonia is expected to weigh on the region’s performance, which could eventually act as a drag on the aggregate Spanish economy.

Spain Economic Growth

Although economic momentum has proven resilient, an extension of political uncertainty into 2018 will continue to weigh on Spain’s economic forecasts. Political tensions aside, the domestic economy is expected to lose some steam next year on slower employment growth, decreased support from fiscal and monetary policy and higher oil prices. The Met the why particular panel sees growth at 2.6% next year, unchanged from last month’s estimate. For 2019, our panelists see the pace of economic expansion slowing further to 2.3%.

Spain Economy Data

Population (million)46.846.646.546.446.3
GDP per capita (EUR)22,23322,01322,32323,17724,045
GDP (EUR bn)1,0111,0261,0371,0761,114
Economic Growth (GDP, annual variation in %)-2.9-
Domestic Demand (annual variation in %)-5.1-
Consumption (annual variation in %)-3.6-
Investment (annual variation in %)-8.6-
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-6.4-
Industrial Production (annual variation in %)-6.6-
Retail Sales (annual variation in %)-7.0-
Unemployment Rate24.826.124.422.119.6
Fiscal Balance (% of GDP)-11.5-7.0-6.0-5.1-4.5
Public Debt (% of GDP)85.795.511099.899.4
Inflation Rate (HICP, annual variation in %, eop)3.00.3-1.1-0.11.4
Inflation Rate (HICP, annual variation in %)2.41.5-0.2-0.6-0.3
Inflation (PPI, annual variation in %)3.80.6-1.3-  -  
Policy Interest Rate (%)0.750.250.05-  -  
Stock Market (annual variation in %)-4.721.43.7-7.2-2.0
Exchange Rate (vs USD)1.321.381.21-  -  
Exchange Rate (vs USD, aop)1.291.331.33-  -  
Current Account (% of GDP)-
Current Account Balance (EUR bn)-2.415.611.314.721.5
Trade Balance (EUR billion)-31.0-16.0-24.0-24.2-18.8

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Spain Facts

Bond Yield1.375.62 %Dec 06
Exchange Rate1.180.65 %Dec 06
Stock Market11,184-0.74 %Dec 06

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