The growth of Spanish remains strong. According to the national Institute of Statistics (INE) of the Kingdom, the Spanish GDP rose 0.7 % in the last quarter of 2016. On the whole the year 2016, the growth in Spain increased by 3.2 %, the same pace as in 2015. This is a growth the highest in the euro zone.
The detail of these figures will not be known as the 2 next march, but economists believe that growth is mainly based on domestic demand, and particularly household consumption, which was sustained by the gains in purchasing power associated with inflation still low and the drop in unemployment. Fiscal policy should also support growth, as is the case for the past three years (and this is one of the reasons for the disappointing results of the ratios of budget of the country). The investment should also be strengthened. Finally, despite the export growth, the growth in Spanish remains very greedy of imports : the contribution of external trade is expected to remain low.
The last quarter is experiencing a rate of growth equal to that of the third quarter. However, it should be remembered that this rate of 0.7% is the lowest since the last quarter of 2014. Year-on-year growth of Spanish in the fourth quarter amounted to 3 %, which is less than the third quarter (3.2 %) and this is the lowest level since the first quarter of 2015. Despite all this, Spain has a rate of recovery supported and, Ireland excepted, which is unique among the countries that have experienced the visit of the troika and have found themselves at the centre of the european debt crisis of 2010-2013.
growth with less employment than before
The Uk has now surpassed its level of GDP from before his “second recession” that began in the last quarter of 2010 of almost 3 %. This second recession that lasted until the third quarter of 2013. On the other hand, the wealth of Spanish remains still 0.4% below its high point in the second quarter of 2008, but we can say that, now, Spain has erased the bulk of its years of crisis. With however a difference : the unemployment, although declining, remains very high at 18.9 % of the active population in December 2017, compared with 14.8 % at the high point of the growth, in December 2008.
In addition, it can be seen on the long-term growth of the Spanish remains, in fine, moderate. In ten years, between the third quarter of 2006 and 2016, the Spanish GDP increased by 3.1 %. It is certainly better than Italy, Greece and Portugal which have not found their level of wealth ten years ago, but it is vastly lower than the growth in French (7.4 %) and German (12.2 per cent). In the end, beyond the impressive figures of current economic growth in Spain, it is important to keep in mind a few items : the country has experienced a true “lost decade” in and out of the crisis socially fragile : it is one of the countries where the risk of poverty is the highest in the euro zone and where inequalities are the most important.
Two negative elements to 2017
The challenge will therefore be to maintain in 2017 that growth. Observers tend, however, to expect a slowdown in the pace. If Spain should benefit from an improvement in the european context, several elements to play against the force of the growth. First, the resumption of inflation. Spain is a country where prices are more sensitive to the price of oil. Inflation is thus accelerated markedly by the end of the year after years of decline. The problem is that the growth of the purchasing power of the Spaniards was mainly a function of this low inflation. Wages follow prices ? So far, they have remained without dynamics. Without wage growth, real incomes and hence household consumption should slow down.
Another negative : the fiscal policy which, in reality, has been one of the key elements of the recovery. The european Commission has forced Madrid to engage in a fiscal consolidation, fast, with, in particular, tax increases of 5 billion euros. This will be a support to the growth of the Spanish, who may not now what to expect in a strong increase in the external growth and a further recovery of the investment. Nevertheless, the country could remain in the leading pack of european growth, with GDP growth expected to near 2.5 %.