The Catalan economy slows, but grows six-tenths more than the Spanish economy.

BarcelonaThe Catalan economy slowed slightly in the first quarter, despite once again recording significant growth and expanding at a faster pace than the Spanish economy as a whole, according to data on the Catalan gross domestic product (GDP, the indicator that measures the size of an economy) published this Monday by Idescat, the statistical institute of the Generalitat (Catalan government).

Thus, Catalan GDP increased by 3.4% in the first three months of the year compared to the same period last year. This figure represents an increase of two-tenths of a percentage point compared to the same period last year. the first estimate published by Idescat last monthThis also means exceeding by six tenths the annual growth rate of the Spanish GDP, which was 2.8%, according to the National Institute of Statistics (INE).

Compared to the previous quarter (the fourth of 2024), the Catalan economy grew by 0.3%. "These are good figures," says Josep Reyner, president of the Catalan economic commission of the College of Economists of Catalonia, who sees them as confirmation that "the pace of growth" of GDP is slowing. "They indicate that this will be a year of stabilization" after two years, 2023 and 2024, in which both Catalonia and Spain have registered strong expansions in activity.

Broad-based growth

Growth was widespread across all sectors, but with a slowdown in activity compared to the previous quarter: "All sectors show increases, although at a lower rate than in the previous quarter," Idescat added in a statement. Services—which represent almost 70% of Catalan GDP—grew 3.6% annually, while industry grew by 2.4% and construction by 2.8%. Agriculture increased by 4.7% compared to the first quarter of 2023 and recovered its positive growth rates after three years of severe drought.

However, compared to the previous quarter, some sectors saw a decrease in activity, such as construction, which fell by 0.1%. In the services sector, although the quarterly increase as a whole was a modest 0.1%, real estate and professional activities registered a 0.1% decline, as did the subsectors consisting of education, healthcare, social services, and public administration. Hospitality, transportation, and commerce increased production by 0.6% compared to the last quarter of 2024.

Industry, on the other hand, maintained good quarterly growth, at 1.3%, and agriculture, at 2.7%. In this regard, the good performance of industry is paralleled by exports, which also increased, in this case by 1.8% annually compared to a year ago, which Reyner attributes "very clearly" to an "anticipation effect" of the trade war launched by the United States. In fact, Spanish exporters had warned that global trade grew during the first quarter because many companies chose to stock up before US President Donald Trump announced a new wave of tariffs, as occurred on April 2. Therefore, it is not included in the Idescat data, which covers the first three months of the year.

Overall, Catalonia's positive balance with the outside world (other countries, but also the rest of the country) increased by 0.3% annually.

Domestically, household consumption increased by 0.5% compared to the previous quarter and by 3.9% annually, notable increases in a quarter that typically sees spending restraint for most households after Christmas and before the arrival of good weather with Easter and summer. In this sense, the positive data for commerce and hospitality may be due to this household consumption. On the other hand, public spending slowed and fell by 1.9% quarterly, despite being 2.6% above the levels of a year earlier.

Slowing investment

Investment, which has been one of the strong points of Catalan economic growth over the past two years, gave mixed signals. Reyner downplays the 1% drop compared to the previous quarter, as this may be due to temporary factors, and longer-term developments will have to be evaluated. Looking further back, the numbers are positive: total investment increased by 4.3% in one year.

Investment purely in construction grew by 1.8%, and investment in capital goods (machinery, vehicles, and other productive assets) soared by 7.8% compared to the first quarter of 2024. This latter figure is especially positive because this type of business investment typically contributes to increases in production, leading to the evolution of the current production model to a more advanced one, with a greater emphasis on higher value-added sectors (advanced industry, research, highly skilled professional activities) and, therefore, with better-paid jobs.

In this area, Reyner points out that investment "shouldn't do badly" in the coming months, because the context is favorable: the European Central Bank's interest rate cuts make it easier for companies and families to take out loans, and, in addition, government agencies are still receiving funds from the European Next Generation program.