Consumption and investment keep the Spanish economy on track this summer

BarcelonaThe Spanish economy continued to grow during the summer at a pace significantly higher than that of most European countries. Business investment and household consumption were the two main drivers of growth at a time when the external sector (exports and tourism) slowed its activity. Thus, in the third quarter of this year, Spain's gross domestic product (GDP, the indicator that measures the size of an economy) expanded by 0.6% compared to the previous quarter, while compared to the same period in 2024, growth was 2.8%, according to preliminary data released this Wednesday. In a statement, the Ministry of Economy highlighted that the growth "reflects the strength of the labor market and the increase in purchasing power" of citizens and the "dynamism of the Spanish economy." The figures represent a slight slowdown compared to those from the second quarter —when quarterly growth was one-tenth of a percentage point higher, at 0.7%, and annual growth three-tenths of a percentage point higher, at 3.1%—but it remains at a clearly higher pace than the other major European economies. For example, Germany, traditionally the economic engine of the continent, has been in a near-recession for three years, while the other two large countries in the eurozone, France and Italy, are registering annual growth rates that are less than half of Spain's.

In fact, recently both the International Monetary Fund (IMF) as theOrganization for Economic Cooperation and Development (OECD) have revised their growth forecast for Spain in 2025 upwards, unlike the Bank of Spain, which in June he cut them.

The external sector subtracts

The growth figures are even more remarkable considering that the external sector (tourism and exports) had a negative contribution to growth; that is, it reduced GDP. However, strong domestic demand, driven by consumption and investment, more than compensated for the decline in the external sector. For example, economic activity within the country contributed 1.2 percentage points to economic growth compared to the previous quarter, but the external sector subtracted 0.6 points, bringing the quarterly rate to 0.6%. Similarly, the annual increase of 2.8% is the result of 3.7 points contributed by domestic demand, offset by a decrease of 0.8 points in external demand. According to the INE (National Statistics Institute), in the case of the external sector, imports of goods and services grew at a significantly faster rate than exports, which, however, also increased. Compared to a year ago, exports increased by 3.2%, a slowdown of six-tenths of a percentage point compared to the figure recorded in the second quarter of this year. Conversely, imports increased by 6.1% year-on-year, a level similar to that of the previous quarter. This increase in imports at a faster pace than exports increases Spain's trade deficit and explains why the contribution of the external sector to growth was negative. The external sector includes both the purchase and sale of physical goods abroad and services. That is, it includes as exports the spending of foreign tourists in Spain and, as imports, what Spanish tourists spend in third countries. The fact that Spain has maintained positive export growth shows that, for the moment, it is withstanding the effects of the tariff war initiated with Donald Trump's return to the presidency of the United States. Investment soars

Regarding economic activity within the country, household consumption and, above all, investment were the two pillars of Spanish growth. In the case of business investment, it is noteworthy that it grew by 1.7% between July and September and by 7.6% compared to the same period in 2014. Weak investment, particularly productive investment by companies, had been one of the weak points of the Spanish economy since the 2008 financial crisis.

As for households, consumption rose 1.2% compared to the previous three months (3.3% more than a year ago), while public spending grew 1.1% quarter-on-quarter and 1.3% annually. By sector, construction led the way, with activity expanding by 6.1% year-on-year. Industry grew by 3% annually, and services, which represent more than two-thirds of Spain's GDP, grew by 3.2%. Only the primary sector experienced a decline, of 2.2%. The data published this Wednesday by the INE (National Statistics Institute) is a first preview, which the statistical institution itself will confirm and expand upon on December 23. Likewise, next week Idescat, the statistical agency of the Generalitat (Government of Catalonia), will publish a first preview of Catalonia's GDP data.