Spanish growth rebounded strongly in the second quarter, to 1.1%.

This content was published on Jul 29, 2022 – 07:00
29 July 2022 – 07:00

(AFP)

Spanish growth rebounded strongly in the second quarter of the year, to 1.1%, thanks to a high level of investment and a strong increase in consumption, and despite the rise in inflation, according to official data published Friday.

However, this good performance was accompanied by a rise in inflation, which reached 10.8% year-on-year in July, and 0.6 points above June (10.2%), according to an official estimate.

The growth rate was “nine-tenths higher than that recorded in the first quarter,” the National Institute of Statistics said in a statement, at 0.2%. The data broadly beat the expectations of the Bank of Spain, which had forecast 0.4%.

This strong growth contrasts with the difficulties many European countries are facing and comes after Spain, which was hit hard by the Covid-19 epidemic in 2020, retreated in previous months compared to its neighbours, many of which have already recovered from the losses linked to the health crisis.

“All indicators point to strong economic growth also between April and June,” the Spanish Minister of Economy, Nadia Calvino, advanced on Tuesday, referring in particular to the good performance of investment and the “favorable” conditions for exports, due to the depreciation of the euro against the dollar.

According to the National Institute of Statistics, business investment increased 2.8% in the second quarter, after growing 3.4% in the previous three months. Exports rose 1.6% after rising 1.1% between January and March.

Household consumption, which fell in the previous quarter (-2%) mainly due to higher energy prices, increased by 3.2% between April and June, a record high since the second quarter of 2021.

The Spanish government has admitted that it expects a slowdown in activity in the coming months, due to the deterioration of the global economy related in particular to the war in Ukraine.

Madrid revised its growth forecast for 2022 to 4.3% instead of the 7% initially expected, and also for 2023 to 2.7% instead of the 3.5% initially expected.

In any case, they are more optimistic forecasts than the European Commission forecast which expects 4% this year and 2.1% in 2023, and the International Monetary Fund (IMF) forecasts which forecast 4% in 2022 and 2% the following year.

Spain has been hit hard by the COVID-19 pandemic, with GDP falling by 10% in 2020. Since then, economic activity has recovered, but at a slower pace than expected by the executive branch.

The country, which grew 5.1% last year, must not return to the level of activity prior to the pandemic before the third quarter of 2023, according to the Bank of Spain.