Quarterly GDP (INE and AIReF)
In Q3 2018, Spain’s GDP grew by 2.4% yearon- year (-0.1pp than in Q2 2018), with a contribution of 2.8 points by domestic demand and, for the fifth consecutive quarter, a negative contribution by the external sector, of 0.4 points.
In Q4 2018, AIReF maintains its quarterly growth forecast at 0.7%, which means that the year-on-year growth of the Spanish economy is at 2.5% in 2018 (0.5pp below that of 2017).
For 2019, in the wake of the downward revision of growth expectations by the main national and international organisations, the Government is expected to present a new macroeconomic scenario with a growth rate of 2.2% compared with the previous 2.3%.
Labour market
In December, the number of unemployed people registered in the Social Security fell by 50,570 people compared with November, reaching a total of 3,202,297. In total, 2018 closes with 210,484 fewer unemployed people, representing an annual reduction of 6.17% (vs 7.8 in 2017).
The average number of affiliations to the Social Security shows its best data since 2007 after advancing 3.06% year-on-year to a total of 19,024,165 employed, 2.67 million more than since the phase of economic expansion commenced in 2014. Thus, the affiliates-to-pensioners ratio increased slightly with respect to 2017, standing at 2.28%.
CPI (INE)
In December, the leading indicator of the harmonised index of consumer prices (HICP) in Spain decreased, for the second consecutive month, to 1.2%, mainly due to the fall in fuel prices.
Since November, inflation in Spain has remained below that of the Euro area, with a difference of 0.4pp.
United Kingdom
In Q3 2018, the current account deficit increased 64% year-on-year to £26.52bn (5% of GDP), its worst record since Q3 2016.
By components, the largest setbacks occurred in the primary income (108%) and in the trade balance of goods and services (63%).
Signs of global economic slowdown
Manufacturing PMI
In December, despite the slight rise in production, China’s Manufacturing PMI (a leading indicator of GDP evolution) stood at 49.7 points, hinting to an economic contraction.
In the case of the US, this indicator of business sentiment fell by 5.2 points, to 54.1, in comparison with November.
The evolution of this indicator in these two superpowers (The US & China) coincides with that of the five major European economies.
In this context, the World Bank has lowered its growth forecasts to 2.9% in 2019, compared to its previous estimate of 3%.
Recession in Germany
In November, the industrial activity in Germany continued its third consecutive month of contraction (1.9% per month), mainly due to the weakening of the energy sector.
Additionally, in Q3 2018, the German GDP shrank by 0.2% quarterly. Should this trend continue in Q4 the German economy would enter into technical recession1.
Economic sentiment for the Euro area
In December, the Economic Sentiment Index of the European Commission, which analyses the confidence of households and companies, suffered a greater decline than expected as it stood at its lowest level since 2016. The worsening private-sector expectations are mainly explained by the possibility of a looming recession in Germany, the global trade tensions, and the risks associated with a no-deal Brexit.
