The Spanish economy has entered a notably slower phase during the summer, according to fresh National Accounting figures released by the National Institute of Statistics. The new data show a marked revision to the first half of the year and a minor dip in the third quarter growth, moving from 0.2% previously to 0.1%. This single-tenth change marks a softer pace than the INE had projected at the end of October. The third quarter growth is interpreted as a sign of a cooling trend after a stronger second quarter that posted a 2% increase, a rebound that now looks less robust once seasonal adjustments are considered.
When viewed against the same period in 2021, the year on year performance still reflects resilience, with GDP up 4.4%. This level surpasses the 3.8% that analysts had expected by late October. The year over year strength is partly explained by the revision to the first semester, which lifts the annual path despite the slower quarterly pace in the later months. Early indicators show that quarterly momentum fluctuated: growth was exceptionally strong in the first quarter, eased in the second, and cooled again in the third. These revisions alter the narrative around the trend, suggesting the expansion is losing some steam rather than collapsing, yet the overall trajectory remains positive for the year as a whole.
Household demand and the sentiment around purchasing power play a central role in this evolution. In current prices, households spent roughly 10% more in the summer than in the spring quarter, a rise driven by discretionary spending and a rebound in services. When price levels are taken into account, real consumption shows a more modest rise, with household consumption increasing only slightly after a previous stronger performance. The pattern points to an inertia in domestic demand that some forecasters expected to slow further as inflation persisted and financing conditions tightened. The resulting mix of price pressures and consumption behavior helps explain why the quarterly numbers did not accelerate more despite a favorable base from the previous year.
Government projections frame the annual outlook as being stronger than earlier expectations. The preliminary data for the final quarter of the year indicate a growth rate that is modestly higher than the third quarter, aligning with statements from senior officials in the economy ministry. Analysts observe that the fourth quarter could push the full-year growth above earlier projections, supported by domestic demand and ongoing investment. The authorities remain confident that the economy will close the year with a solid expansion, although they acknowledge that the pace will be steadier than in the peak moments of the recovery. These views are echoed by the central bank, which has updated its forecasts, balancing an upgrade for current growth with a slight downward revision for the coming year. Although the Bank of Spain trimmed its 2023 projection for next year, the revision offset some earlier optimism by emphasizing a cautious stance on inflation and the path of real incomes. Together, these signals sketch a cautious but hopeful outlook for the economy as it navigates higher price pressures and tighter financial conditions while still delivering positive annual growth. The divergence between robust annual signals and softer quarterly performance highlights the complexity of the recovery, where momentum can appear uneven over successive quarters even as the longer horizon remains favorable.