Q2 - 2017 Spanish Economy Continues To Head In A Positive Direction

The economy continues to build momentum as stronger-than-expected dynamics in the first quarter carry over into Q2. Households continue to benefit from higher real estate prices and robust job creation—growth in Social Security affiliations picked up in April—which so far have prevented the effects of mediocre wage growth and rising inflation from wreaking havoc on private spending. 

Other leading data points to a better-performing economy, with both the services and manufacturing PMIs accelerating markedly in April and exports expanding at the fastest pace on record in Q1. In line with the improved dynamics, GDP growth for Q1 was confirmed at a robust 0.8% quarter-on-quarter.

The strength of the economy will play a critical role in this year’s long-belated budget, as officials expect economic growth to bring about a sizeable increase in tax collection and a hike in social security contributions, which in turn will allow the expected shortfall to meet the EU target of 3.1% of GDP for 2017.