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The Spanish economy beat expectations at the end of last year, benefiting from a surge in investment and strong export demand.
Gross domestic product rose 2% in the fourth quarter following growth of 2.6% in the previous three months. That beats economist estimates for an increase of 1.4%. It’s also better than France’s 0.7% expansion and the contraction Germany is likely to report.
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Spain’s rebound is supported by falling unemployment and one of Europe’s highest vaccination rates that’s helped avoid the kind of restrictions other countries implemented to stem the spread of Covid-19. Still, the economy continues to trail pre-crisis output after shrinking almost 11% in 2020 and expanding just 5.2% last year. That leaves GDP at the end of last year around 4% below its pre-pandemic level, according to Bloomberg Economics.
What Bloomberg Economics Says…
“Spain’s economy continued to expand rapidly in 4Q, probably outpacing the rest of the euro area amid strong demand for its exports and increased investment. Still, activity was well below its pre-pandemic level in the quarter and we expect the rapid spread of omicron to slow progress in 1Q, adding a new hurdle to Spain’s arduous journey back to full recovery.”
—-Maeva Cousin, senior euro-area economist. For full REACT, click here
The euro area’s fourth-largest economy has also been hit by a jump in energy costs, pushing inflation to a 30-year high. That might further dampen consumer spending, especially as price pressures are set to stay elevated for most of 2022.
In the fourth quarter, investments grew 8.5%, while private consumption was down 1.2%. Exports rose 6.5% in the three months through December.
©2022 Bloomberg L.P.
Spanish Economy Grew 2% in Fourth Quarter, Beating Estimates - Financial Post
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