Spain's economy saw expansion in the third quarter, primarily fueled by consumption, although at a slightly slower pace compared to the previous three months. The country's post-pandemic growth has started to cool down.
According to the country's statistics agency INE, Spanish gross domestic product (GDP) grew by 0.3% from July to September, compared to a growth rate of 0.4% in the preceding quarter. This growth aligned with the expectations of economists polled by The Wall Street Journal. On an annual basis, GDP increased by 1.8% in the third quarter.
This positive data comes on the heels of INE's announcement that Spain experienced its highest employment levels ever recorded during the third quarter. The resurgence of the tourism sector played a significant role in driving job creation, despite a slight uptick in the unemployment rate.
In August, Spain welcomed over 10 million visitors, marking a 14% increase compared to the previous year. However, this figure still fell slightly below the numbers from August 2019.
The growth in the third quarter was primarily driven by domestic demand. Household spending rose by 1.4% compared to the previous quarter, while government spending increased by 0.6%. However, investment experienced a decline of 0.4%, according to INE's data.
On the downside, both exports of goods and services and imports contracted, with a decline of 4.0% and 3.1% respectively. This highlights the fragility of the global economy.
Despite this positive GDP data, Angel Talavera, head of Europe economics at Oxford Economics, expressed caution about the future. Talavera noted that inflation is rising again, and employment growth is slowing down, making it challenging to predict a repeat performance in the fourth quarter.
Looking ahead, Spain's economic growth in 2023 is expected to decelerate compared to the 5.8% growth recorded in 2022. However, it is still anticipated to outperform some of its peer nations. The European Commission predicts a GDP growth rate of 2.2% for Spain in the full year, compared to 1.0% for France, 0.9% for Italy, and a contraction of 0.4% for Germany.