| GDP growth forecasts have been revised upwards by 0.4 percentage points for 2024 to reach 2.9%, and by 0.3 pp for 2025 to reach 2.4%. This is due to statistical revisions of historical data, recent developments more favourable than expected, and improved estimates of external and internal demand contributions. |
| Key points |
- Global growth will converge toward moderate levels. In the U.S., forecasts have improved due to recent data, but a slowdown is anticipated. In the eurozone, projections remain unchanged. In China, recent stimulus measures will support growth but will not prevent a structural slowdown.
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- The good performance of the economy is based on improvements in competitiveness—especially in services—, the increase in the labour force—mainly immigrants—and a fiscal policy that continues to support domestic demand.
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- Going forward, a slowdown is expected as the contribution of external demand turns negative, given the limitation of the expansion of tourism services exports and the transition to a growth model with higher spending on imported goods.
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- The economy faces structural challenges such as bottlenecks in some exporting sectors, the factors behind the increase in household savings, low levels of investment and productivity (particularly in housing), an ageing population, a shortage of certain types of human capital, and fiscal adjustments in the coming years.
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| GDP growth has been revised upwards by four-tenths of a percentage point in 2024 to 2.9% and by three-tenths in 2025 to 2.4%. This is due to statistical updates of historical data, along with more positive recent developments than expected. It is also to incorporate improvements in the contribution likely to be made by both external and domestic demand. Services exports continue to increase more than expected, while consumption —both private and public— is emerging as an alternative growth driver. The strong economic performance is based on improvements in competitiveness (especially in services), an increase in the labour force (mostly migrants), and a fiscal policy that for now continues to support domestic demand. In addition to this, inflation has fallen, thanks to the drop in oil and food prices, as have interest rates. Moving forward, a slowdown is expected as the contribution of external demand turns negative due to limits on the expansion of exports of tourism services and the transition to a growth model with higher spending on imported goods. Moreover, the improvement in goods exports may not be widespread due to bottlenecks in certain sectors. Consumption progress may moderate, especially if the factors that have driven up the household savings rate continue. The relatively low level of investment in transportation machinery and equipment may be due to a lower impact of European funds and, together with the lack of housing, may threaten the competitiveness of the Spanish economy. Fiscal policy should become contractionary from 2025 onward, in an environment where there is no consensus on the measures needed to reduce imbalances in public accounts while limiting the impact on the economy. |
| GDP growth forecast for 2024 upgraded to 2.9%, thanks to higher contributions from both domestic and external demand |
| Available information shows that the economy has performed better than expected three months ago. The National Statistics Institute (INE) has again revised upwards the growth outlook for Gross Domestic Product (GDP) in the second half of 2023 and the first half of 2024. In particular, data for the second quarter showed a higher-than-expected advance (0.8% quarter-on-quarter versus 0.6%). All else constant, this would add between two and three-tenths of a percentage point to projected GDP growth for 2024. Furthermore, real-time information suggests that GDP growth would have remained at similar levels in the third quarter (between 0.6% and 0.7%), also above what was forecast last June (0.5%). |
| The improvement in this year’s forecast is explained by the expectation of a greater positive contribution from both domestic and external demand. First, the average annual growth in household consumption is expected to be around 2.5% this year (compared to the 2.1% expected in June). Second, the historical revision of the general government consumption series has revealed that it is stronger than expected. As a result, the forecast has been raised from a positive 1.8% to 3.9%. Lastly, expectations for the evolution of exports have improved, which could now increase by 3.5 % (3.3 % in June), while the forecast for import growth has worsened (from 2.6 % to 2.3 %). |
| For the full document click the link below: |
| Spain: Economic Outlook. October 2024 |
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