Spanish economy growth higher than expected

by Lorraine Williamson
Spanish economy

The Spanish economy grew by 0.8% in the first quarter of the year. That’s 0.1% more than expected and also 0.1% more than in the fourth quarter of 2023. The Spanish statistical office INE published these data on Tuesday.

In addition, the Spanish economy accelerated its year-on-year growth by 0.4% in the first quarter of the year, to 2.5%. This is also 0.1% above the figure presented by INE at the end of April.

Domestic demand contributed 2.3% to year-on-year GDP growth. It is the most pronounced growth since the summer of 2022, while foreign demand contributed 0.2%. The 0.8% quarter-on-quarter GDP growth was mainly driven by the foreign sector, which accounted for 0.5% of total growth.

The overall year-over-year gain of 2.5% in the first quarter of the year is the most pronounced since the first quarter of 2023, when growth was 4%.

Largest quarterly increase in two years

The Minister of Economy, Trade and Enterprise, Carlos Cuerpo, highlighted that the quarterly advance of the Spanish economy at 0.8% is the largest quarterly increase in GDP in almost two years. According to the INE series, such a large quarterly increase in GDP has not been seen since the second quarter of 2022.

“The Spanish economy continues to grow faster than the main European economies, creating more and better jobs, improving the purchasing power of families, stimulating productive investment and strengthening the competitiveness of our companies,” Cuerpo stressed.

Investments boost GDP

In the first three months of the year, household consumption grew by 0.4%, 0.1% more than in the previous quarter, while government spending contracted by 0.6%, which is the first negative quarterly figure since the second quarter of 2022.

Investment rose 2.6% after two negative quarters between January and March to the highest rate since the first quarter of 2023.

Residential investment rose 2.8% quarter-on-quarter, following declines in the previous two quarters, while investment in machinery and equipment increased by 3.7%, compared to a 4.3% decline in the fourth quarter of 2023. Exports increased by 3.3% between January and March, a growth of 0.5% more than in the previous quarter, while imports rebounded by 2.2%, 0.2% less than in the October-December 2023 period.

GDP before current prices increased by 5.8% year-on-year. That’s 1.4% lower than in the last quarter of last year. On a quarterly basis, it rose by 1.4% to €380 billion. And that means a new record in the historic series of the INE.

Acceleration of year-on-year growth

On an annual basis, GDP grew by 2.5% in the first quarter, which is 0.4% more than in the previous quarter and 0.1% more than the figure released by INE at the end of April.

Household consumption accelerated year-on-year growth by 0.1% to 2.5%, while government spending rose by 3.4%, 0.7% less than in the fourth quarter of 2023. Investments were up 1.8% year-on-year, down 0.3% from the previous quarter. Exports and imports fell slightly by 0.2% and 0.7%, respectively. In the prior quarter, they increased by 1.1% and 1.6%.

Employment up

Employment rose 3.4% year-on-year, down 0.5% from the previous quarter. On a quarterly basis, there was a decline of 0.1% after six consecutive quarters of growth.

The number of hours actually worked fell by 0.3% between January and March and increased by 1.3% year-on-year, one point less than in the last quarter of 2023.

Also read: Spain´s economy is growing three times faster than that of the Eurozone

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