Spain: Slight growth deceleration confirmed, but still well above the eurozone average
The Spanish economy grew by 0.8% in 3Q, slightly lower than the second quarter, but abover the eurozone average. The figures are not impacted by the Catalonia issue
Compared to a year ago, the economy grew by 3.1%, the same year-on-year rate as in 2Q. The Eurozone as a whole grew by 2.5% over the same period in the third quarter. Domestic demand was up, and that contribution to the Spanish year-on-year growth rate increased from 2.3 percentage points in 2Q to 2.7 percentage points. This was mainly due to a surge in investment. Export growth remained relatively stable, but import growth accelerated. The contribution of external demand to the year-on-year growth rate therefore declined. Overall we can conclude that the strong recovery of the Spanish economy continued in 3Q.
| 0.8% |
Spanish GDP growthThird quarter |
Initial data for the fourth quarter, however, does show some impact of the political crisis which could impact growth. Retail sales (calendar adjusted) dropped by 0.1% in October compared with a year ago. In September sales increased by 1.6%. The drop for Spain as a whole is mainly due to a sharp decline in Catalonia. Out of the 17 autonomous regions, retail sales for Catalonia dropped the most. The unadjusted series fell by 3.9%. Alongside Madrid, where retail sales growth was flat, Catalonia weighs heavily in the index.
Meanwhile, Spain is preparing for the Catalan elections planned on the 21st of December. These elections could lead to a more long-term solution for the crisis as a number of pro-independence politicians say that for the time being, they would refrain from a unilateral declaration of independence. Instead, they called for talks with Madrid.
According to the latest polls there are no big shifts in the political landscape in Catalonia. The unionists and the pro-independence parties get approximately the same amount of votes. The ERC (pro-independence) party would get the most votes (26%), followed by two unionist parties Citizens (20%) and the Socialists’ party of Catalonia (15%). Carles Puigdemont’s party, PDeCat, is the fourth largest (14%). Of course, these polls should be interpreted with caution.
The economic impact of the elections will, of course, depend on the results. For now, our base case is that there will be a negotiated solution after the elections. This will take time, but as long as there is progress in finding a solution, we think the economic impact will be limited.
"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.
This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.
ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).