Growth forecasts, Spain
For 2019, the Bank of Spain has raised its growth forecasts to 2.4%, up by 0.2pp than in March, given the favourable business investments and the positive contribution of
the external demand, mainly due to the lower propensity to import. In addition, the Spanish economy grows on the back of a favourable competitive position via prices, the expansionary monetary policy, and the private sector asset amelioration. In contrast, growth slowdown continues in 2020 and 2021 (1.9% and 1.7% respectively), as a result of the fiscal stimulus fading to an end, the lower consumption of Spanish households, and the impact of mounting uncertainty in the wake of trade tensions and the Brexit endgame scenarios.
From January-April 2019, the number of international tourist arrivals in Spain increased by 4.4% year-on-year to reach 21.4 million visitors (vs 20.5 in the same period of 2018). By country, the main tourist sending countries were the United Kingdom (19.98%), Germany (13.83%), and France (12.65%).
At the same time, tourism spending increased by 5% year-on-year, up by 0.4 pp than in the same period last year, reaching €22.4 billion (1.86% of GDP). Although the rate at which average spending per tourist was increasing has slowed down to 0.7% year-on-year (€ 1,051), which is 1.5pp lower than in the same period last year.
Household net worth
Since 2013, the net worth of Spanish households has increased by 25%, reaching €6.64 trillion in 2018 (5.5 times the Spanish GDP), observing:
• A 25% increase in real estate net worth, reaching €5.27 billion, as house prices recover by approximately 30% since the record lows hit in 2014.
• An increase of 23.4% in the financial wealth, which accounts for € 1.37 trillion of the total.
This evolution demonstrates that the net worth of Spanish households is increasingly more diversified, as the share of financial wealth rises from 13.21% in 2007 to 0.63%
in 2018. Nonetheless, real estate is still deemed by the Spanish households as the best decision to allocate their savings and continues to take the lion’s share with 79.36% of the total net worth, compared to 65% on average in the euro area.
Since 2018, European industry displays a greater fragility in its growth rate, against the backdrop of tenacious trade tensions between the US and China, the weakness of the automobile sector1, and the lower dynamism of global demand. In April, the industrial production of the main economies of the Eurozone has had a heterogeneous
• In Germany, it fell by 3.4% year-on-year for the sixth consecutive month, in line with the evolution of its manufacturing PMI, which since January 2019 is in the contraction zone2.
• In Italy, it fell by 1.4% year-on-year in an environment marked by its political and economic fragility in which the lack of correction in its high levels of debt have led the European Commission to open an EDP3 against the country once again.
• In Spain, after dropping by 3% year-onyear in March, it starts to show a positive note by increasing by 1.7%.
• France increased by 1.1% year-on-year, showing the greatest dynamism of European economies, with its average annual growth rate at 0.8% since the beginning of the year.
Trade war: “rare earth”
China, faced with the recent trade measures imposed by the Trump Administration, threatens to limit or restrict exports of rare earth metals1, in a context in which they fell by 15.9% month-on-month in May, to accumulate 3,639.5 tons2.
Although currently 80% of US imports of rare earth metals are concentrated in China, the scope of this measure would be limited if the US, in the short-term, diversified he origin of its imports to other countries and, in the medium-term, promoted the development of their own deposits.
Global growth (IMF)
The IMF has revised down its world growth forecast in 2019 to 2.6%, which is 0.3pp below the forecast in January. Some of the main causes for the deterioration of the
global situation are the reduction of business confidence, the increase in financial and trade tensions, and the lower dynamism of investment in emerging markets. Specifically, in 2019, it is projected that trade and investment will moderate to 2.1% and 1.9% annually, respectively (vs. 3.3% and 3% in 2018).