Wednesday, December 8

GDP hardly grows 2% in the third quarter with the threats of inflation and shortages




New setback for the Executive, which expected a resounding advance in GDP in the third quarter after the revision of the data for the second. The economy barely grew by 2% quarter-on-quarter between July and September, under the threat of inflation and shortages, according to data from the National Institute of Statistics (INE). The government’s forecasts for the year as a whole (6.5%) are increasingly unfeasible.

This data is preceded by the great downward revision made by the Statistics of the data for the second quarter. In the first instance, it calculated a rebound of 2.8% between April and June, but a little over a month ago it reduced the figure by 1.7 points to 1.1%. Likewise, yesterday the inflation figure for October, the leading indicator, was released, which stands at 5.5%, which is the highest figure in 29 years.

In year-on-year terms, the economy registered a rise of 2.7%, compared to 17.5% a quarter earlier. The contribution of the national demand The year-on-year GDP growth is 1.5 points, 15.8 points lower than that of the second quarter. For its part, external demand presents a contribution of 1.2 points, one point higher than last quarter. Traditionally, in Spain the foreign sector has been the one that has pulled the recovery; This was the case, for example, in the previous crisis, that of 2008, with a galloping unemployment rate and depressed domestic consumption.

Thus, in year-on-year terms, hours worked grew by 3.3%, a rate 26.2 points lower than in the second quarter of 2021, and full-time equivalent positions did so by 6.2%, 12.7 points less than in the second quarter. Just yesterday the data from the Active Population Survey (EPA) were also known, which placed the employed at more than 20 million, although thanks to the push of the public sector and temporary employment.

Household spending, which theoretically accumulates a large savings pool derived from the pandemic, fell by 0.5% quarter-on-quarter, pushing down the final spending figure to a negative rate of 0.3%. In year-on-year terms, household spending grew by 1.1%, but 22.3 points less than in the previous quarter, meaning that the slowdown in consumption during the summer months has also contributed to such a tepid growth , compared to what was expected.

Both the Government and the main analysis houses, after the revision of the INE, expected that the third quarter would be very vigorous, with rates even higher than 3% since, in theory, what would not have grown in the second quarter was going away to be transferred to the third party. It seems that finally it has not been like that. Moreover, the Executive hoped to be able to achieve 6.5% growth in 2021 for the economy to accelerate in the second part of the year and today’s INE data further complicate La Moncloa’s estimate.

Exports, meanwhile, grew 6.4% between the second and third quarters, while gross capital formation rebounded 2%. The latter registers a variation of 1.3% upwards, 17.6 points lower than that of the previous quarter, evidencing the slowdown in investment. On the other hand, exports of goods and services show a variation of 13.7% compared to the third quarter of 2020, which is 25.2 points less than in the previous quarter

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