Signs of slowdown set in for the Spanish economy


In Q2 2018, the Spanish economy expanded by 0.6% quarter-on-quarter, one-tenth less than in Q1, and 2.7% year-on-year, after narrowly exceeding 3% in the last three years.

This evolution is explained by the deceleration in private consumption (+0.2% vs 0.6% average in 2017) and by the drop in exports (-1%), a factor that subtracts two-tenths of a percentage point from growth.

Consumer packaged goods (CPG) and retail trade

In the first semester of 2018, the CPG sector shrunk for the first time since 2014 (-0.9% vs +1.8% in the same period of 2017). Nonetheless, turnover increased by 3%, owing to the rise in prices (+3.9% vs 1.2% in the first half of 2017). In addition, retail trade at constant prices in July fell by 0.4% year-on-year (-0.1% in June), mainly due to the loss of purchasing power caused by the surge in inflation.

Cooling labour market

In August, primarily due to the end of the summer season, Social Security lost 202,996 affiliates compared with July (-1.07%), reaching 18,839,814 affiliates. It is the worst data recorded for August since 2008, although in year-on-year terms the upward trend over the last four years continues to push through with an increase of 2.9%.

Whereas, registered unemployment also recorded the highest increase for August since 2011, increasing by 47,047 people to 3,182,068 (5.92% less in year-on-year terms).


In July, 9.98 million international visitors arrived in Spain, 4.9% fewer visitors year-on-year, representing the biggest drop since April

This figure is mainly explained by:

− The peak geopolitical instability in Turkey, Tunisia and Egypt.

− The first signs of a slowdown in the main tourist sending economies such as the United Kingdom, France and Germany.

− Good weather conditions in Northern Europe.

CPI flash estimate (INE)

In August, the year-on-year variation of the CPI remained at 2.2%, predominantly due to soaring electricity prices.

For the fourth consecutive month, the Harmonized Index of Consumer Prices (HICP) exceeds the euro area average (2%), proving detrimental to the competitiveness of the Spanish economy.

Euro area unemployment (Eurostat)

In July, the euro area unemployment rate remained at 8.2% of the active population, 0.9 pp lower in year-on-year terms, reaching its lowest level since November 2008.

Greece and Spain continue to register very high unemployment rates, while in Germany and the Netherlands they remain below 4%.

Emerging market currencies

The macroeconomic imbalances of Argentina and Turkey (high levels of debt and inflation) have been accentuated by the depreciation of their currencies since the beginning of the year by 51.1% and 43.1%, respectively.

In Argentina, financial instability has forced its central bank to hike interest rates to 60%. Moreover, Mauricio Macri has announced a path of fiscal consolidation aimed at achieving budget balance in 2019 and a surplus of 1% in 2020.

Among the measures of this plan are:

− A reduction in public investment (0.7 points of GDP)

− Abolition of subsidies (0.5 points)

− A cut in salaries and public operating expenditure (0.2 points)

− Imposition of tariffs on export sectors that reaped the most benefit of the depreciation of the peso, as is the case with processed food.

In Turkey, the strong depreciation of the lira has accelerated, well above expected, the growth of core inflation standing at 17.2% year-on-year in August (15.1% in July) which is more than double the upper limit of the target band defined by its central bank (3-7%).

Economy South AFrica

In Q2, South Africa’s economic growth fell by 0.7%, accumulating two quarters of contraction. For the first time since 2009, the second largest economy in the African continent enters a recession1, which has accentuated the loss of value of the rand, with an accumulated depreciation of over 19.8% against the dollar so far this year.

1 A recession is technically said to occur when real GDP has declined for over two consecutive quarters

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