10 May

European Comission: Country Report Spain 2018 (economic growth exceeds expectations)

The European Comission has issued the Country Report Spain 2018, in which deals the Spanish economic situations, financial market indicators, labour market, future estimations… According to the report, economic growth continued exceeding expectations in 2017.

The volume of GDP finally surpassed its pre-crisis peak in the second quarter of 2017, and growth remained robust in the third quarter, at 0.8 % q-o-q. According to the GDP flash estimate, growth slightly decreased to 0.7% q-o-q during the fourth quarter, bringing the annual growth rate for 2017 to 3.1%. The expansion is underpinned by a more balanced growth pattern than before the crisis. Domestic demand, and specifically private consumption, remains the main driver of growth, but net exports have also been contributing firmly to growth since 2016.

Recovery and job creation

The strength of the recovery and of job creation partly reflects the impact of the structural reforms implemented in the early years of the crisis, in particular the financial sector and labour market reforms.

As favourable tailwinds subside, growth is expected to decelerate but remain robust. Real GDP growth is forecast to moderate to 2.6 % in 2018 and 2.1 % in 2019.

Private consumption is expected to slow down as job creation decelerates and the tailwinds that

supported the growth of disposable income in recent years – i.e. declining oil prices, tax cuts andimproving financial conditions – abate. However, private consumption is still projected to remain the main contributor to growth until 2019, as disposable income continues to increase and the financial position of households improves.

After decelerating in 2016, growth of investment is expected to have rebounded in 2017, driven by residential construction. It is then set to ease slightly in 2018 and 2019, as equipment investment growth moderates in line with final demand. Downward risks to the outlook nevertheless exist, as uncertainty linked to the political situation in Catalonia could have a negative impact on growth, the size of which cannot be anticipated at this stage. At the same time, a stronger than expected recovery in othereuro area countries is an upside risk for export growth.

Click here to access the full report. And remember that if you are thinking about set up a company in Spain, or if you have workers in Spain, don´t hesitate to contact our team of experts.

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