Spain GDP Growth Exceeds Expectations

(RTTNews) - Spain's economy grew more than expected in the third quarter on household spending, advance estimate from the statistical office INE showed Friday.

Gross domestic product expanded 0.3 percent sequentially, following second quarter's revised 0.4 percent expansion. The growth rate was seen at 0.2 percent.

On a yearly basis, economic growth eased to 1.8 percent from 2.0 percent a quarter ago. Nonetheless, this was better than the expected 1.6 percent.

The expenditure-side breakdown showed that household spending grew at a faster pace of 1.4 percent on quarter after a 0.9 percent gain. Meanwhile, growth in government spending eased to 0.6 percent from 1.6 percent.

Gross fixed capital formation was down 0.4 percent, in contrast to the 1.9 percent rise in the second quarter.

Exports of goods and services decreased 4.0 percent after a 3.3 percent drop. Likewise, the fall in imports deepened to 3.1 percent from 2.1 percent.

Capital Economics' economist Adrian Prettejohn said the Spanish economy will slow in the final quarter of 2023 as investment is set to shrink again due to high interest rates and consumption to be much weaker given that wage growth has been slowing and inflation looks set to rise. The slowdown is likely to continue in the coming months as the economy will begin to feel the impact of the European Central Bank's monetary policy tightening, ING economist Wouter Thierie said.

Earlier in September, the Bank of Spain retained its 2023 growth outlook at 2.3 percent, but downgraded its projection for next year to 1.8 percent from 2.2 percent and the 2025 outlook to 2.0 percent from 2.1 percent.

Another data from the statistical office on Friday showed that retail sales posted a slower growth in September. Sales posted an annual growth of 6.5 percent after rising 7.1 percent in August.

Food sales climbed 2.6 percent and non-food sales surged 15.9 percent. Service stations registered an annual fall of 8.7 percent, data showed.

Month-on-month, retail sales gained 0.2 percent. This follows August's 0.3 percent rise.