The slowdown in activity in the second half of 2023 should be contained: real GDP growth would only decline from +0.4% q/q in Q2 2023 to +0.3% q/q in Q3, and +0.2% q/q in Q4. The deterioration in the PMI surveys is continuing in both the manufacturing sector (46.5 in August) and the services sector (49.3). However, private consumption is resilient thanks to an ever-expanding labour market and a recovery in household confidence since spring. Nevertheless, job creation is coming down, owing to the slowdown in activity. The downside risks to activity remain significant, as the effects of rising interest rates are leading to an increasingly sharp contraction in credit to households and companies.
After months of decline attributable to falling energy prices, inflation rebounded this summer, up from 1.8% y/y in June to 2.6% y/y in August. Although Spain remains one of the countries in the eurozone where inflation is the lowest, prices should continue to rise more quickly over the next few months: the increase in oil prices should increase fuel prices, which have already jumped by more than 5% m/m in August. Furthermore, inflationary pressures in services are not abating: excluding rents, the annual increase in the services CPI fell slightly from 4.8% to 4.7%, but the 3m/3m annualised rate rose to 5.8%, the highest in more than 20 years. Wages rose moderately (3.4% year-on-year in August according to branch agreements communicated by the government); so far, this is sufficient to support households’ purchasing power.
With real GDP growth now forecast at 2.2% over 2023 as a whole, Spain should remain one of the drivers of the euro zone this year, for which we forecast growth of 0.6%. In addition, the INE updated the national accounting data for the 2020-2022 period on 18 September. It led to significant upward revisions of GDP growth for 2021 and 2022 (and a slight improvement for 2020). The revisions for these two years went from 5.5% to 6.1% and from 5.5% to 5.8% respectively. This increase reconciles somewhat the GDP statistics with the evolution in the labour market. These changes highlight the difficulties facing statisticians in accurately assessing activity during the pandemic and the following months.
Guillaume Derrien
