Growth forecasts

In the current context of deceleration of the global economy, the main international organisations have lowered their growth forecasts for Spain. The European Commission and the OECD agree that the Spanish economy will grow 2.6% in 2018 and 2.2% in 2019, below the IMF estimate (2.7% and 2.2%, respectively). For its part, the Government expects a growth of 2.6% and 2.3%.

Spain’s current account balance

From January to September, the cumulative surplus of the current account balance fell by 73.6% in year-on-year terms to €2.93bn, the lowest figure for that period since 2012.

This decline is mainly the result of a 30.4% drop in the balance of goods & services, with a 6% increase in imports year-on-year, 3.2pp above exports (2.8%).

Spain HICP

In November, inflation dropped by 0.6pp to 1.7% year-on-year, predominantly due to the reduction in electricity and fuel prices. If this figure is confirmed, Spain’s inflation would be below the Euro area average (2%), reversing the trend maintained for the last six months.

Economic indicators for Spain

  • In November, registered unemployment fell by 6.37% yearon- year, 221,414 fewer unemployed people, totalling 3,252,867, its lowest level since December 2008. The number of affiliates increased by 2.9% year-on-year to a total of 18,945,624 (+527,868 year-on-year).
  • In November, consumer confidence dipped by 6.6%, 0.9pp less than in October. In contrast, retail confidence rose by 10.7% (9.5% in October).
  • In October, retail sales grew by 3.3%, after experiencing a 1.4% drop in September, and 11.5% in department stores (-4.5% in September).
    Whereas, vehicle registration decreased by 6.6%, softening the fall from the 17% decrease recorded in September.

Euro area unemployment

In October, Euro area unemployment remained at 8.1%, 0.7pp lower year-on-year, its lowest level since November 2008. By countries, Greece and Spain remain the two economies with the highest unemployment rates (18.9% and 14.8% respectively), whereas Germany and the Netherlands report levels below 4%.

Impact of Brexit

Since the referendum in June 2016, the uncertainty surrounding the exit conditions of the United Kingdom from the EU has led, according to UBS, to a depreciation of the pound of more than 10% and a loss of GDP growth and investment of 2.1% and 4%, respectively.

The Central Bank of England has estimated a decrease in GDP of between 1.25% and 10.5% from mid-2016 to 2021, depending on the final exit scenario of the United Kingdom*.

China- US

On December 2, after the G20 summit in Argentina, the US and China have agreed from January 1 on a moratorium of 90 days in which they will not raise tariffs or expand the list of products affected by the trade war. Specifically, the US has pledged not to raise tariffs from 10 to 25% on Chinese imports valued at $200bn, and China has announced a reduction in tariffs on US vehicles, which currently are at around 40%.

Oil prices

After the Brent barrel surpassed $85 in early October due to the sanctions on Iran and the over-compliance of the OPEC agreement quotas, the price of crude oil has fallen by 22% in November, its biggest drop in a month since 2008, explained by the greater supply and the precarious prospects for world trade growth.

The developments in oil price hinge to the lack of agreement at the OPEC meeting in Vienna, to the trade relations between the US and China, to the production cut in the Alberta region, and to the departure of Qatar from OPEC in January 2019.


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