The shutdown of the foreign sector has slowed the rate of economic growth in Spain, which was 1.8% year-on-year in the second quarter of the year, compared to 4.2% in the previous quarter. According to the provisional national accounting data published yesterday by the INE, in the second quarter the Spanish economy grew by 0.4% compared to the first, a rate more than a tenth lower than the 0.6% that it recorded the first trimester.
Spokespeople for the executive highlighted yesterday that, "in a context of high uncertainty and rising interest rates, the Spanish economy continues to demonstrate solidity and resilience". According to the employers' association CEOE, on the other hand, the containment of GDP growth in the second quarter can anticipate "a scenario of economic slowdown after the summer". In his opinion, the impact of the rise in interest rates on the consumption and investment of families and companies, the situation of public finances and the geopolitical panorama constitute "a scenario that can slow down activity and employment ".
The growth in the second quarter was driven by the increase in national demand, which grew by 1.5%, thanks to the improvement in investment in construction, equipment and consumer goods, by companies and administrations public and, although less so, from households. A meritorious behavior, according to the first vice-president, Nadia Calviño, "in the complex international context of economic slowdown and interest rate hikes".
Consumption expenditure increased by 1.4% compared to the same quarter of 2022: although households slowed spending (which grew by 0.5% annually), public administrations increased it by 3.8% , and companies, 2.2%.
Investment or gross capital formation rose by 2.2% (1.7 points more than the previous quarter) driven by the construction of real estate and housing, which grew by 4.4%, although it is also slowing down compared to previous quarters. Investment in machinery and weapons systems fell by 2.8% and has already accumulated three quarters of setbacks.
External demand, on the other hand, grew by only 0.3% (against 2.8% in the first quarter). Export income grew by 0.7% compared to last year, which means 9.5 points less than the previous quarter. This slowdown is due to a decline in exports of goods (down 3.6%), while sales of services abroad grew by 11.2%, twelve points less than a year ago . In this heading, tourism (expenditure in Spain by non-residents) stands out, which grew by 15.9% compared to last year, an increase that is 17.7 points lower than in the first quarter.
The slowdown in exports and tourism was moderated by the brake on imports of goods and services, which grew by only 0.2%, due to the drop in the price of energy and raw materials.
From the point of view of supply, the second quarter was marked by the shutdown of industry, which grew by 0% in the quarter, compared to 4.3% in the previous quarter. Agriculture also grew very little, by 0.5%, and the most dynamic sector was construction, which grew by 5.4%.
Regarding services, the gross added value added 2.1%, 2.3 points less than the previous quarter. The rise in interest rates causes a sharp deterioration in financial and insurance activities (down 6%) and real estate (-3.9%), while technological, information and communications services remain strong ( 5.4%) and trade, transport and hospitality (4.4%, but six points less than the previous quarter).
The strength of the economy was reflected in employment, so that hours worked grew by 1.3% quarter-on-quarter, and by 0.6% compared to a year ago. This equates to an increase in full-time jobs of 2.9%. In other words, the creation of 546,000 jobs in one year. Agriculture (-3.2%) and industry (-0.4%) destroyed employment compared to last year, but it was created in construction (3%) and, above all, in services (3, 6% increase compared to last year). For this reason, productivity per workplace was reduced by 1.1%.
As a negative reverse, the INE also highlights price pressures. Thus, inflation – measured with the implicit GDP deflator – increased by 6.0% compared to the same quarter of 2022, a rate three tenths lower than that of the first quarter and much higher than inflation measured with the CPI. The year-on-year variation in the unit labor cost this quarter stands at 5.6%: a significant increase, but which, the INE reminds us, "is four tenths lower than the variation experienced by the implicit deflator of the economy (6.0 %)".
