Spain’s economy has continued its robust growth in the second quarter of 2024, recording a 0.8% increase compared to the previous quarter. This growth surpasses the consensus forecast of 0.5%, as indicated by the Funcas Panel in July, and matches the first quarter’s performance.
The National Statistics Institute (INE) data reveal a promising first half of the year, with annual growth now expected to reach 2.9%, up from the government’s forecast of 2.4%.
Key economic indicators
The Economy Minister, Carlos Cuerpo, attributes this positive trend to the “strong dynamism” of Spain´s economy highlighting balanced growth with significant contributions from the external sector and moderated price levels. The manufacturing industry has shown notable strength, and the employment rate has hit a record high of 21.7 million in the second quarter.
Inflation and price trends
July’s inflation data, released by the INE, show a decrease of six-tenths in the general index to 2.8%, compared to the same month in 2023. Core inflation also fell to 2.8%, the lowest since January 2022. This decline is largely due to reduced electricity and food prices, despite a gradual VAT increase.
Domestic and external demand
Domestic demand contributed two percentage points to the annual growth, while the external sector added 0.9 points. On a quarterly basis, external demand had a greater impact (0.5 points) than internal demand (0.3 points). Export activity surged by 1.2% in the second quarter, while imports decreased by 0.2%. Household consumption, public consumption, and business investment saw modest growth rates of 0.3%, 0.2%, and 0.3%, respectively.
Sectoral performance
All major sectors, except the primary sector, reported positive value-added growth. The industrial sector grew by 0.4%, with manufacturing leading at 1.1%. The construction sector saw a minimal increase of 0.1%, while services accelerated to 0.9%. Despite a quarterly decline of 1.2% in the primary sector, all sectors exhibited positive annual growth rates: industry at 4%, agriculture at 2.9%, services at 2.7%, and construction at 2.4%.
Productivity and employment
Productivity per full-time equivalent job rose by 0.9% year-on-year in Q2 2024, ending four consecutive quarters of negative growth. Furthermore, productivity per hour worked also increased by 0.8%, marking two consecutive quarters of growth. This productivity rise coincides with a 2.5% annual increase in full-time equivalent jobs and a significant 4.4% rise in average remuneration per job. Business profits grew by 5.2%, the highest since Q3 2023.
Spain’s economic performance in the first half of 2024 suggests continued resilience and growth, raising expectations for an upward revision of annual forecasts if the momentum is maintained.