Spanish Economy Maintains Growth Amid External Challenges

The Spanish economy experienced a growth rate of 0.6% in the third quarter of the year, which is two-tenths lower than the previous quarter. This deceleration was primarily due to the performance of the external sector, which detracted six-tenths from growth. In contrast, domestic demand contributed significantly, adding 1.2 points to the economy's performance during the summer months. Year-on-year GDP growth stood at 2.8% for the third quarter, also two-tenths lower than the previous quarter, as reported by the National Statistics Institute (INE). According to the Ministry of Economy, the quarterly growth of 0.6% achieved this summer demonstrates the ongoing dynamism of the Spanish economy. Notably, this marks the ninth consecutive quarter with a growth rate of 0.6% or more compared to the prior quarter, as highlighted by Carlos Cuerpo's department. The Ministry credits domestic demand as the main driver of quarterly GDP growth, supported by consumer spending and investment amidst a backdrop of geopolitical and commercial uncertainty globally. Between July and September, household final consumption expenditure rose by 1.2%, five-tenths more than in the previous quarter, essentially doubling the growth rate of the earlier period. This increase reflects the strength of the labor market and an uptick in purchasing power. Public expenditure advanced by 1.1% in the same period, marking its largest increase since the third quarter of 2024, and investment rose by 1.7%, surpassing the second quarter’s performance by one full point. However, the external sector played a contrasting role, with a decrease in exports by 0.6% during the third quarter, breaking a trend of previous gains. Imports, while still increasing, moderated their growth to 1.1%, down by five-tenths from prior quarters. Year-on-year, domestic demand was the sole contributor to the 2.8% growth, providing a positive impact of 3.7 points, while external demand negatively affected growth by eight-tenths. Analyzing year-on-year data, household consumption grew by 2.8%, two-tenths lower than the previous quarter, with household expenditures rising by 3.3% and public spending decreasing by six-tenths to 1.3%. Moreover, investment saw a notable acceleration with a year-on-year advance of 7.6%, reflecting a 2.4-point increase from the second quarter. The Ministry of Economy also pointed out that the year-on-year growth noted in the third quarter reinforces recent upward adjustments in the forecasts from major national and international institutions for 2025. According to the International Monetary Fund (IMF), Spain is expected to lead among advanced economies with a projected growth of 2.9%, with other organizations suggesting even higher estimates. Related Sources: • Source 1 • Source 2