Spain’s Economy Maintains an Accelerated Pace in Early 2024
Spain’s economy stayed on a fast track in the first quarter, even surpassing earlier preliminary estimates. The National Institute of Statistics (INE) raised the quarterly growth rate for Q1 2024 to 0.8%, a tenth higher than previously reported and also marginally above the last quarter of 2023. This confirms a momentum driven by strong tourism and positive contributions from investment in the opening months of 2024.
Foreign tourism spending led the advance, rising 17.4% quarter over quarter, followed by a 1.3% increase in domestic household consumption and a 2.6% rise in fixed capital formation. These were the key drivers behind the gross domestic product (GDP) expansion reported by INE after incorporating the latest available economic data sources.
The quarter-on-quarter growth of 0.8% marks the strongest increase in nearly two years, and the year-over-year rate stood at 2.5% when compared with Q1 2023, up from 2.1% in the previous quarter. Domestic demand contributed 2.3 percentage points to growth, while external demand added 0.2 points.
No Slowdown Expected
Spain’s annual growth rate of 2.5% mirrors the rate observed across the whole of the previous year, despite early forecasts of a slowdown for 2024. The aggregate data shows steady momentum rather than a deceleration.
Hours worked increased by 1.3% year over year, with employment measured in full-time equivalent terms up 3.4% in the same comparison, compared with 2.3% and 3.9% in the prior quarter, respectively.
Economy Minister Carlos Cuerpo described the revised INE figures as a string of good news and emphasized a balanced growth driven by three pillars: investment expansion across sectors, particularly in capital goods and housing; stronger private consumption underpinned by higher household purchasing power and job creation; and a robust external sector led by growing exports and broad manufacturing strength, especially a 2.2% quarterly rise in manufacturing activity compared with late 2023. [INE data update, attribution]
The construction sector saw gross value added rise 1.8% quarter over quarter, outpacing the prior period by six tenths of a point. Services also accelerated slightly, posting a 0.3% gain, while primary sectors grew by 3.1% after a 5.3% surge in the previous quarter.
Prices at Current Prices
The GDP at current prices, including the effects of the domestic price deflator, climbed 5.8% year over year, reflecting a cooling in inflationary pressures from late 2023. On a quarterly basis, prices rose 1.4%. The GDP deflator grew 3.2% year over year, a drop of 1.8 percentage points from the prior quarter. The quarterly change was 0.6%.
The portion of growth tied to production taxes and subsidies, net of subsidies, rose 3.5% year over year, vs. 24.9% in the previous quarter. On a quarterly basis, this measure increased by 10.1%.
Regarding earnings, wages for salaried workers rose 8.3% year over year, driven by a 3.8% increase in the number of full-time equivalent jobs and a 4.4% rise in average pay per full-time position. In quarterly terms, total remuneration advanced 2.9%, full-time positions rose 0.8%, and average pay climbed 2.1%.
The operating surplus and mixed income advanced 3.6% year over year, a rate one percentage point higher than the last quarter of 2023. In quarterly terms, the surplus declined by 2.0%.
In sum, the European economy’s contribution to domestic income remained resilient, with tax revenue from production and imports net of subsidies growing 3.5% year over year and 10.1% quarter over quarter. [INE data, attribution]