The Spanish economy has confirmed its capacity for resistance at the beginning of the year marked by international turbulence. According to the final National Accounting data published this Thursday by the National Institute of Statistics (INE), between January and March. This data, although it represents a slight slowdown of two tenths compared to the vigorous close of the previous year, places the interannual growth rate at 2.7%. Although the Ministry of Economy celebrates that the country leads the progress among the main powers of the euro zone, analysts warn that the composition of this growth is less virtuous than expected, relying excessively on consumption and showing cracks in investment and sales abroad.
Experts suggest that the first quarter data could be conditioned by extraordinary temporary factors. Raymond Torres, director of Economics at Funcas, points to a phenomenon of “advance orders” by companies during the month of March. The outbreak of the war in the Middle East at the end of February would have pushed the business community to secure supplies due to fear of future shortages, a behavior that has been observed in the (hence why in April the index contracted for the first time in two and a half years). Torres warns that this stockpiling and advance orders could translate into a downward adjustment during the second quarter of the year, once the preventive effect has been exhausted.
The labor market continues to show exceptional resilience, acting as a shield from the current geopolitical instability.
Inflation is precisely the side where the greatest risks are concentrated. Although GDP growth remains positive, Torres insists that the main problem of the economy lies in prices. With underlying inflation (which excludes the most volatile elements, such as energy and unprocessed food), the country faces a progressive loss of competitiveness that could hamper exports in the future. Added to this is the uncertainty derived from the increase in fuel prices and international volatility, which, although they have not stopped consumption so far, may represent a brake in the medium term.
Despite these dark clouds, the outlook for the coming months maintains a moderately optimistic tone. The activity indicators corresponding to the first half of June suggest that the economy maintains its inertia. Miguel Cardoso, chief economist for Spain BBVA Research estimates that GDP growth for the second quarter will be between 0.6% and 0.7%, which would confirm that the country continues to weather the geopolitical ups and downs with relative strength.
The economy’s ability to absorb international uncertainty continues to surprise analysts, although they agree that economic growth towards the end of the year will depend on private investment increasing.
