MADRID – Household purchases are the basis for a country’s economic growth. In Spain, less and less is being consumed due to rising prices. This means that the Spanish economic growth is slowing down.
In the first quarter of 2022, we can hardly speak of growth with an increase of 0.3%. This percentage contrasts sharply with that at the end of the fourth quarter of last year: 2.2% and it is far from the Spanish Bank’s forecast of 0.9%.
Households buy less
The slowdown in growth is mainly the result of lower household spending due to price increases. The Omicron variant that was around in Spain at the beginning of this year has also contributed. Yet no one could have foreseen this fall in spending. The Spanish Statistical Office INE finds that household consumption in the country has collapsed by 3.7%.
This is the first negative figure for household spending since the first quarter of 2021 and the largest decline since the second quarter of 2020. When the pandemic and the lockdown caused a free fall in household spending of 20.4%.
Difficult for economic forecasts
These numbers make it even more difficult for the government to make economic forecasts. On Friday, the cabinet will present these forecasts, which will also be sent to Brussels. A complicating factor is that most of the data on which these figures are based still come from February. That means that the impact of the Russian invasion of Ukraine has not yet been factored in.
So the government has had to adjust its growth forecasts, lowering them to 4.3%. Nevertheless, according to Minister Calviño of Economic Affairs, Spain “maintains a strong growth rate” that is above the average EU growth. Earlier, the government forecast a growth of 7%. According to Calviño, the reduction is almost entirely due to the war in Ukraine. Added to this is the high inflation caused by the energy crisis.