Domestic consumption bounced back below expectations and IEN believed the economy to contract by -0.2% in the first quarter.
The Spanish economy saved the second quarter of the year, accelerating to 1.5% growth. This is reflected in national accounting data published this Friday by the National Institute of Statistics (INE), which has revised the figure to four tenths from an estimated 1.1% in July.
However, it is also confirmed that the year began in the negative with a -0.2% drop in GDP in the first quarter marked by the outbreak of war in Ukraine, the Omicron version and the transporters’ strike. Till a few months ago, the January to March growth was expected to be +0.2%.
In year-on-year terms, GDP for the second quarter grew 6.8%, up from 6.7% in the previous quarter and five-tenths higher than advanced by statistics in July.
“The measures adopted to protect companies, households and vulnerable groups from rising energy and other raw material prices and progress in the deployment of the recovery plan explain this good practice,” they indicate to the Ministry of Economy. “These figures show a solid growth pattern with a positive contribution from domestic demand and strong dynamics from exports,” he said.
The resistance of the Spanish economy is evident in relation to the effect that the energy crisis and runaway inflation have had on the other great powers. For example, the German economy grew barely 0.1% in the second quarter. And according to another statistical estimate, the US also contracted 0.1% in the period.
However, there are data that call for caution. Domestic consumption grew by 1.2% during the second quarter. But this figure is well below the 3.2 per cent estimated in July. Thus, the “good pattern” of domestic demand is far from the contribution of this component. Specifically, a total of 1.9 points for year-over-year GDP, which is down 1.9 points compared to the first quarter.
Thus the national economy was supported by good performance of exports and tourism, with external demand contributing 4.9 points to year-on-year GDP in the second quarter, up 2.1 points from the first.
For its part, gross capital formation increased by 0.8%. There is a stronger reading in the data than the decline in family spending (-1.2%) and investment (-5%) in the first quarter.
INE states that in advance data for the second quarter published at the end of July, most indicators on economic growth for the quarter produced results by May. And those published this Friday by Statistics already include all the statistical indicators that mark the economic growth of the second quarter, the period hit by the war in Ukraine.
The second quarter’s growth brings the likelihood that Spain will end the year with growth of around 4%. However, the new indicators that have emerged in these weeks call for caution in the face of the final phase of the year. After the resumption of tourism, these last months of the year, at least, seem complicated.
The worsening of the war in Ukraine and the loss of purchasing power derived from inflation could have an impact on domestic consumption, as well as the economy as a whole by the process of raising interest rates by central banks.
In fact, the government already handles growth prospects at rates closer to that 4%, as estimated by major international institutions, compared to the 4.3% established by the latest macroeconomic table. And the same goes for 2023. The message is that the Spanish economy will grow “about 2%” next year. A figure that would cut seven tenths from 2.7% of the macro table that the executive would have to update with the next budget.