Spain Revises GDP Growth Sharply Higher After Data Doubts
Spain’s economy grew more than initially thought suggesting the recovery gathered pace in the second half of the year.
(Bloomberg) -- Spain’s economy grew more than initially thought in the third quarter -- suggesting the recovery gathered pace in the second half of the year, albeit before the emergence of the coronavirus’s omicron variant.
Gross domestic product grew 3.4% from a year ago, more than the 2.7% initially estimated, official figures showed Thursday. Some economists had questioned the original reading, arguing that high-frequency data indicated the euro area’s fourth-biggest economy was rebounding more robustly from its deepest contraction on record.
In the runup to the revision, the official statistics agency known as INE had said indicators published since the preliminary estimate pointed to a more favorable situation. It shocked analysts earlier this year by slashing second-quarter growth to 1.1% from an initial 2.8%.
On Thursday, INE said household spending and exports were better than originally thought.
Despite the brighter picture painted by the data, however, the future is clouded by the resurgent pandemic, which has already prompted lockdowns and travel bans in parts of Europe.
Omicron Winter
The improved third-quarter consumption numbers must be put into the context of the better health backdrop at that time, according to Ignacio de la Torre, chief economist at Arcano Partners in Madrid.
“Omicron will mean a slowdown in the rate of progression for the economy during the winter,” said de la Torre, who’d predicted the revision given inconsistencies between productivity and employment data.
ING economist Steven Trypsteen, meanwhile, increased his 2022 growth forecast by 0.3 percentage point to 3.7%. But he remained at the lower end of analyst projections as he expects the latest virus wave to hit Spain particularly hard as tougher European restrictions on movement are expected to curb the flow of tourists.
The International Monetary Fund downgraded Spain’s economic outlook for 2021 and 2022 this week, citing Covid-19’s latest blow to services and global supply snags. The Bank of Spain also cut its growth forecasts last week, warning of a hit to consumption from soaring inflation.
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