Spain GDP growth confirmed way above EU for 2017 and 2018 by the European Commission
Before investing anywhere, it’s always good to check the Economy and the macroeconomic data of the country. There is a good news: the economic expectations of Spain are revised upwards.
Here is the summary of the European Commission:
Strong, balanced growth set to continue
Economic activity accelerated in the first half of this year, underpinned by private consumption and exports. Growth is set to remain robust but ease going forward, driven by a slowdown in private consumption. The unemployment rate is projected to continue declining. Thanks to the positive macroeconomic outlook and continued expenditure restraint, the general government deficit and debt ratios are forecast to continue declining.
In fact, the Spanish GDP growth expectations remain way above average: 3.1% in 2017
Rather than slowing as expected in spring, economic activity accelerated in the second quarter of 2017. Real GDP posted a strong 0.9% expansion on a quarterly basis in the second quarter of 2017. The growth is expected to remain strong in 2018 and 2019, check those prevision:
Strong growth in the first half of the year defers the expected deceleration
- Domestic demand remains the main engine of growth
- Strong job creation supports private consumption
- Residential construction investment rebounded.
- Net exports also continue to sustain GDP growth.
- Growth is easing in the second half of the year, but real GDP is still expected to increase by a robust 3.1% in 2017 .
To be fair, the events in Catalonia should have some impact, it’s difficult to measure those now.
Compare the GDP growth expectations for Spain vs other EU countries with our interactive charts:
You will see right away that Spain is in the winning group in Europe.
2017 GDP Growth expectations – interactive chart
2018 GDP Growth expectations – interactive chart
Source: European Commission
- Growth is expected to continue easing over the forecast horizon, to 2.5% in 2018 and 2.1% in 2019 but remains higher than EU averages.
- Private consumption is projected to remain the main driver of growth, but to slow down as the pace of job creation moderates.
- Residential construction and equipment investment are set to ease gradually.
Net exports contributing to growth
- Exports have been accelerating this year, as Spain continues to record gains in export market shares and the external environment improves.
- Imports are also expected to moderate in 2018 and 2019, in line with final demand.
- As exports are expected to continue growing faster than imports, net trade should make a significant contribution to growth throughout the forecast horizon.
The unemployment rate to fall to about 14% by 2019
- Job creation accelerated in the first half of the year, but the pace of job creation slowed down in the third quarter.
- The unemployment rate to fall to about 14% by 2019, a reduction from 21% at its peak in 2013.
- Wage growth is projected to remain subdued this year despite the pickup in inflation.
- Productivity is expected to grow only moderately.
- Further cost-competitiveness gains against the rest of the euro area are expected.
Inflation expected to moderate again
- Headline inflation is forecast to moderate to an annual average of 2%.
Risks to the outlook
- The risk exists that future developments in Catalonia could have an impact on growth.
- Growth could benefit from a stronger than expected contribution from net exports.
Strong growth continues to reduce the deficit
- After narrowing to 4.5% of GDP in 2016, Spain’s general government deficit continued to decrease in the first half of 2017.
- The government deficit of 3.1% of GDP is expected for 2017.
- The fiscal forecast for 2018 is driven by the relatively strong macroeconomic performance.
- This is expected to lead to a narrowing of the deficit to 2.4% of GDP in 2018.
- In 2019, at unchanged policies, it is expected to narrow further to 1.7% of GDP.
The general government debt ratio is expected to decrease slightly to 95.5% of GDP in 2019, as a result of relatively strong nominal GDP growth and the narrowing budget deficit.