The Spanish economy grew as expected by 0.7% quarter-on-quarter, as in 3Q17 and 4Q17 and compared to a year ago, the economy expanded by 2.9%, notes Steven Trypsteen, Economist at ING.

Key Quotes

“The good growth figure was expected as the high frequency data for 1Q was generally optimistic. The average PMI for 1Q18 was higher than in 4Q17 and the unemployment rate continued to decline. Consumer confidence, on the other hand, declined a bit but remained at a high level.”

“The European Commission's Economic Sentiment Index for Spain increased from 109.0 in March to 110.6 in April, which is close to the recent peak of 110.9 in January 2018.”

“Inflation in April slowed somewhat from 1.3% in March to 1.1% in April and was mainly due to lower package holidays, due to the reversal of the March increase on the back of early Easter holidays, and gas prices. We expect, however, that inflation will slowly edge higher in the months to come.”

“On the political front, there seems to be a breakthrough concerning the 2018 budget.”

Outlook for 2018

All in all, we remain upbeat on the Spanish economy. For 2018, we forecast 2.6%, compared to the 3.1% in 2017. Even though this implies a slowdown towards the end of the year, this would still be a decent yearly performance and lies above our Eurozone 2018 growth forecast of 2.4%.”

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