Spain Economic Outlook 2Q19
The recovery will continue, although expectations are tempered in 2019 and 2020
Growth expectations are revised downwards and risks increase
In the short run, the increase in activity will remain solid…
GDP growth observed and forecasts using the MICA-BBVA model (%, QoQ)
…boosted by public investment and consumption, with extremely volatile private investment
What is boosting growth?
(Average quarterly growth 4Q18-1Q19, %)
Private consumption
0.60.5
Current*
Forecastin Nov-18
0.60.6
1.90.8
0.42.0
0.10.4
1.01.6
Public consumption
Investment in other buildings and constructions
2.6%
2018 +0.1pp
2.2%
2019 -0.2pp
1.9%
2020 -0.1pp
Con�dence interval (CI). Estimate (e). Forecast (f)Source: BBVA Research based on national sources
CI 20%
*4Q18 observed, 1Q19 forecastSource: BBVA Research based on INE data
Source: BBVA Research based on BdE dataReal State
Exports of goods
Investment in M&E
Investment in housing
The growth in global demand despite uncertainty
1
Increased �nancing to families due to employment growth and household con�dence
3
The expansionary stance of �scal policy may wane
2
3
A more expansionary monetary policy stance
Long-term interest rates:
2
2019 1.60%
(-100 bp compared to Nov 18)
2020 2.25%
(-85 bp compared to Nov 18)
2018 1.50%
The slowdown in private consumption growth (YoY)
1
2019 2.0% 2020 1.7%2018 2.3%
What is hindering growth?
Residential investment growth has been hindered by legal uncertainty (YoY)
4
2019 4.6% 2020 4.3%2018 6.9%
Uncertainty around the impact of the increase of the statutoryminimum wage (SMW)
Changes in primary expenditure for the public sector (pp of GDP)
Social Security Registration: di�erence between the quarterly variation in 1Q19 and the average for 1Q17–1Q18 (wage earners, %)
Spain: new lending operations (SWDA, 2018 average = 100)
107
105
103
101
99
97
95Mar-18 Jun-18 Sep-18 Dec-18 Mar-19(e)
Consumption
Note: AMECO forecasts for the EMU, and BBVA Research forecasts for Spain (a) Actual growth. Forecast (f).
Source: BBVA Research based on Spanish Ministry of the Treasury and AMECO data
Percentage, annual averagesSource: BBVA Research
*People under the age of 30. Trade; hospitality; real estate activities; professional, administrativeand artistic activities; and other services. Canary Islands, Extremadura, Andalusia and Murcia
Source: BBVA Research based on MITRAMISS (Spanish Ministry of Labor, Migrations and Social Security) data
Spain
Eurozone
-0.32018 (Fe)
Groups with the higherincidence of SMW*
Rest
2019 (f)
-0.2
-0.1
0.0
0.1
0.2
0.30.4
0.5
0.6
0.1
0
-0.1
-0.2
-0.3
-0.4
Growth in employment (Labor Force Survey)
Outlook for 2019–2020
2019
2.0%
2020
1.7%
In�ation
2019
1.1%
2020
1.4%
Unemployment rate
2019
13.9%
2020
12.8%
Nominal compensation per employee
2019
2.1%
2020
2.3%
Risks
Risks are still numerous and the likelihood of occurrence of some of them is increasing:
1
Trade tensions: import tari�s in the USA and Brexit
4
Uncertainty about the growthof exports
2
Global low-growth environment
5
Reduced demand in some core sectors, such as tourism
3
Economic policy uncertainty
6
"Premature deindustrialization"in some regions
0.0
0.5
1.0
1.5
0.0
0.5
1.0
1.5
Dec
-13
Mar
-14
Jun
-14
Sep
-14
Dec
-14
Mar
-15
Jun
-15
Sep
-15
Dec
-15
Mar
-16
Jun
-16
Sep
-16
Dec
-16
Mar
-17
Jun
-17
Sep
-17
Dec
-17
Mar
-18
Jun
-18
Sep
-18
Mar
19
(e)
Jun
19 (
f)
Dec
18
Current
CI 40% CI 60%
Spain Economic Outlook 2Q19
