Spain’s economy showed stronger momentum in the second quarter, beating expectations and signaling resilience ahead of schedule. The National Institute of Statistics (INE) reported a 1.5% quarterly increase for April through June, up from the January to March period and well above the 1.1% forecast published in July. On an annual basis, growth accelerated to 6.8%, surpassing the 6.3% pace anticipated in July. These figures paint a picture of a post-pandemic recovery that is more robust than many economists had projected at mid-year. The strength appears to be driven by solid domestic demand and a steady pace of exports, reinforcing confidence in Spain’s economic track record. INE data indicate that the gains in the second quarter are broad-based, with consumption, investment, and export activity contributing to the growth trajectory. The quarterly increase is a sign that household spending and business investment remained firm even as inflation pressures persisted, supported in part by favorable financing conditions and a recovering tourism sector.
Preliminary estimates suggested a higher activity rate in the second quarter than initially thought, implying a continuation of the growth trend into the second half of the year. Government sources and industry analysts described the update as confirmation of the economy’s vitality, noting the positive contribution from both domestic demand and external demand. The outlook for the summer and early autumn remains contingent on inflation dynamics, the duration of price pressures, and how quickly household real incomes recover as consumer confidence stabilizes. While some forecasters warned about a potential slowdown, the consensus among many analysts remains that the economy will experience a measured expansion based on the ongoing rebound in private consumption and improved tourism performance.
Inflation remains a key uncertainty for the economy. Prices rose sharply, with energy costs transmitting a broad uplift to the general price level. Food and energy categories have shown pronounced increases, adding to concerns about real income and purchasing power. Analysts note that the inflation path will influence the timing and strength of any downturn, should it occur, and will determine how quickly monetary policy can normalize without derailing growth. The ongoing energy price dynamics and the broader inflation trend are seen as pivotal variables shaping the near-term economic landscape. The latest data suggest that while inflation has been pressured, price pressures appear to be stabilizing gradually as supply chains normalize and demand remains resilient in some sectors.
At a recent gathering with journalists, IESE professors Xavier Vives and Peter Videla discussed the recession scenario, emphasizing that the depth and duration would hinge on several factors, including the persistence of general price levels and the trajectory of inflation. Their assessment aligns with a mixed outlook in which private consumption rebounded and tourism rebounded strongly in the April to June period after disappointing results earlier in the year. CaixaBank Research echoed this view, highlighting that the rebound in private spending and the tourism surge supported growth through the second quarter.
Government projections place GDP growth around 4.0% to 4.3% for the year. The Fundación de las Cajas de Ahorros (Funcas) panel, which combines the forecasts of 19 research institutions and services, recently cited a slightly more cautious path with a forecast of 4.2% growth for the year. The panel also projected a slower pace in the latter part of the year, with a modest uptick of around 0.1% in the third quarter followed by a small negative print in the fourth quarter. This moderation in the second half would feed through to the 2023 outlook as the previous year’s weaker performance shadows the current year’s trajectory. The panel’s reasoning centers on anticipated cooling effects from inflation, supply constraints, and global demand conditions.
Industry observers at BBVA Research kept a relatively optimistic stance, maintaining a 2022 growth estimate near 4.1% and revising 2023 downward to about 1.8%. The revision reflects the ongoing impact of raw material shortages and the inflationary environment, which weighs on production costs and consumer prices. The overall picture suggests a fiscal and monetary setting that supports a gradual, continued recovery, with risks balanced between inflation persistence and the easing of energy and supply disruptions. In the current climate, Spain’s economy benefits from steady private consumption growth, a rebound in tourism, and a resilient export sector, all contributing to a more favorable growth path as markets adapt to evolving price dynamics.