31 ene 2019
Gross Domestic Product


The increase in public spending enables the Spanish economy to accelerate its growth rate in Q4 to 0.7% quarterly rate

The Spanish economy once again posted a high growth rate in 2018, higher than its community partners, but throughout the year the trend has shown a mild deceleration, said CEOE following the release of the GDP figure. However, the business organization points out that, for the year as a whole, growth has been less balanced than in previous years, since the contribution of the foreign sector has been negative due to the deceleration of exports.

Gross Domestic Product

In its assessment of GDP (Gross Domestic Product), CEOE highlights the behaviour of investment in both, capital goods and construction, although investment decisions are being delayed due to the increase in uncertainty and the higher company costs. In addition, the international context foreseen for 2019 will not favour s strong growth of our exports.

Specifically, the Spanish economy registered some acceleration in Q4-2018, with a quarterly increase of 0.7%. In yoy terms, the growth rate remained at 2.4% and employment grew by 2.6%, one tenth more than in Q3.

For 2018, the increase in GDP and employment stood at 2.6% and 2.5%, respectively, showing a deceleration with respect to the figures posted in 2017, although they can still be described as positive. Throughout the year, there was a gradual loss of momentum in activity, mainly due to a more negative contribution from the foreign sector. All in all, these results have enabled the continued correction of the economy’s imbalances.

CEOE underlines that the favourable evolution recorded in 2018 has still been supported by expansive financial conditions, the recovery of the construction sector and the notable increase in employment. However, there is also a depletion of other driving factors, such as the dynamism of exports.

According to CEOE, after a detailed analysis of the GDP data for Q4, the following remarks are worth noting:


  • Domestic demand reduced its contribution to GDP growth by one tenth to 2.7 percentage points, while the external sector improved slightly and subtracted -0.3 p.p., one tenth less than in Q3.
  • In quarterly terms, all the domestic demand components showed some deceleration, except for public spending, which grew almost one percentage point to 3.0% yoy, the highest rate since the end of 2009. In fact, a third of the quarterly GDP growth could be explained by the increase in public spending.
  • It is worth noting the loss of momentum in investment in capital goods, which stood at 4.8% yoy, 2.2 points lower than the previous quarter. In addition, investment in construction, although to a lesser extent, also slowed its growth (4.8%), decreasing seven tenths in comparison to Q3. The loss of confidence, worse expectations and the increase in company costs are responsible for this slowdown.
  • With regard to household consumption, its quarterly rate showed a slowdown and stood at 0.5%, setting yoy growth at 2.2%.
  • The most positive macroeconomic news come from the foreign sector, where both exports and imports grew significantly, allowing external demand to slow its negative contribution to growth (-0.3 p.p.). However, it will be difficult to keep up this improvement in exports under a scenario of global uncertainty and deceleration of the economy, in addition to the loss of competitiveness caused by the increase in costs for companies.
  • On the supply side, the loss of momentum in industrial activity stands out, both in manufacturing and in the energy industry, which posted a negative yoy figure (-1.1% for the industry as a whole) and accumulates two consecutive quarters of quarterly decreases.
  • Meanwhile, the construction sector continued to show a high level of dynamism, although it posted a slight slowdown to 6.3% yoy. The services sector also showed notable growth (2.9%), where it is worth noting the high growth still being seen in Professional and Information and Communication activities and the rebound in Financial and Insurance activities.
  • The Spanish economy accelerated the creation of employment by one tenth, with a yoy rate of 2.6%. This represents a net increase of 463,000 full-time equivalent jobs in the past year. Meanwhile, productivity per worker fell to -0.2% and productivity per hour worked went down to -0.6%.
  • Remuneration per employee increased its rate of growth by four tenths to 1.5% and unit labor cost (ULC) rose to 1.6%.
  • The GDP deflator, which has posted very moderate rates throughout 2018, around 1%, slowed down in Q4 to 0.8%.