The economy grew by 0.2% in the third quarter compared to the April-June period as consumption resisted the shock to inflation. Preliminary data on GDP (gross domestic product) from July to September confirms a slowdown in activity in Spain, although it also reflects the momentum of the first full tourist season since 2019 without restrictions due to the COVID pandemic.
GDP rose 1.5% in the second quarter, primarily in the major eurozone economies and above forecasts. Again, the expected stagnation was more pronounced in the third quarter, but the surprise is still positive, despite the energy crisis and uncertainty over the Russian invasion of Ukraine.
According to data released this Friday by the INE (National Institute of Statistics), the main driver of growth over the summer was household spending, which rose 1.1% compared to the second quarter. That’s just one-tenth less than it grew quarterly in the previous period.
“The tourism sector has had a spectacular boom, but the industrial sector is also doing well and exports have been very strong,” First Vice President and Economy Minister Nadia Calvino explained this week. He added that job creation continues and month by month “the position of Spain is strengthening in this very difficult context”.
“The Spanish economy continued to grow, even in a quarter marked by a deterioration in the external environment and an increase in interest rates,” Calvino’s ministry emphasized this Friday. “The strength of growth is reflected in the growth rate of domestic demand, the record number of exports and the good tone of industrial activity,” he emphasized.
Looking ahead to 2022 as a whole, the government is forecasting a 4.4% increase in activity. Year-over-year growth in economic activity of 6.7% in the first quarter, 6.8% in the second and 3.8% in the third already points to an average for the year that practically includes this new estimate.
In other words, the executive took over the slowdown in the economy in the third and fourth quarters. This slowdown in the Spanish economy in the second half of the year is due to inflation hitting despite a positive summer. In fact, this is much more of a concern in industry than in services. But it may not be a “tech recession.”
With Q3 growth, Spain’s GDP is still 2% of pre-pandemic levels in Q4 2021. France, Italy and Germany have already completed their recovery from the shock of COVID.
Facilitating a recovery plan
“For its part, in the context of high uncertainty and recession expectations at the European level, the recovery plan has contributed to greater dynamism in investments in capital and intellectual property,” sources from the Ministry of Economy add.
On the other hand, exports once again recorded a very favorable behavior, exceeding the historical level of both goods and services exports “and confirming the good health of the competitiveness of our companies”, concludes the Vice President in charge of the institute. Calvin.
The most worrying thing for our country right now is the loss of purchasing power for families without increasing wages and the European Central Bank is still tightening rate hikes.
The main deterrent is the strength of the labor market, although it is also suffering. For this reason, the government is trying to facilitate an agreement to mitigate the impact of rising interest rates on mortgage loans. And union wages are rising.
But banks in particular and employers in general are resisting, and many workers already have real problems with the effort of paying for housing or going to the supermarket.
Source: El Diario
