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Spanish GDP declined 2.0% q/q saar in 1Q13

The Spanish economy contracted 2.0% q/q saar in 1Q13 (or 0.5% q/q, not annualized). This marks the 7th consecutive quarter of contraction for the Spanish economy. The outcome is in line with last week's tracking estimate of the Bank of Spain and our forecast.
The fiscal tightening plan was very back-loaded last year and it probably explains the persistent weakness at the beginning of 2013, as the economy keeps adjusting to the fiscal consolidation path amid exceptionally high unemployment. One should bear in mind that GDP was supported in 3Q12 (-0.3% q/q not annualized) by spending being pulled forward due to the September VAT hike, so that the outcome for 4Q12 (-0.8 q/q not annualized) was lower as a compensation. Overall, the weak state of the economy in the last part of 2012 is then broadly confirmed. The Spanish statistics office mentioned that the protracted weakness of domestic demand was partly offset by the positive impact of net exports.
No details were published with today's report to analyze the components of demand. Our tracking forecast based on business surveys point to a contraction at a similar pace (-1.8%q/q saar) in the current quarter, then at -0.8%q/q saar pace in 3Q13 before stabilizing in the last part of this year. For the time being, the business surveys do not suggest much progress. In the April reading of the European Commission survey, Spanish economic sentiment rose further 0.9pts to 89.7, which is 6pts above the level in August last year when the ECB announced the OMT. On the other hand, the Spanish PMI has declined to 44.8 in December 2012.
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GPSWebNote Image
Spanish GDP
%q/q saar and %oya
GDP, %q/q saar
GDP, %oya
Source: INE

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