What About Spain’s Slowdown?

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In the next quarter and the following one, we will obviously see an uptick in growth because of the tourist season. But after that, we will see a more marked slowdown, for a variety of reasons, with the first one being the impact of Brexit. But if this is going to lead to recession, I don’t know. I don’t have a crystal ball, but I don’t rule it out.

1) I for one think the Spanish economy is slowing, and in the short term the quarterly rates seem as important as the annual ones, if not more so. According to the series since the PP government began, an focusing on GDP and nominal components of domestic demand, the slowdown in household consumption and in GDP are more than evident. Note that household consumption if the most important component.
2) But the same can also be seen in interannual rates, athough these temper the slowdown.

So I’m sorry, but my argument “still stands up”: it is public administrations’ consumption which is increasingly supporting growth (quarterly rates), whilst household consumption and FBCF are very clearly slowing down. In the US, people usually focus more on the quarterly GDP rate, which is what is announced annually.

There will be some reason for that. In the next quarter and the following one, we will obviously see an uptick because of the tourist season. But after that, we will see a more marked slowdown, for a variety of reasons, with the first one being the impact of Brexit. But if this is going to lead to recession, I don’t know.

I don’t have a crystal ball, but I don’t rule it out. For me, a self-confessed minskyano, recessions are the result of a financial shock. In over 30 years, I have not seen any which has not had monetary or financial origins.

Meanwhile, Rajoy maintains his network and influence in Europe, crucial for buffering the economic cool-off which is on its way.

About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://http://www.miguelnavascues.com/