Spain | A tale of old and young

Summary

Since 2008, private consumption in real terms has failed to keep up with output. Notably, its share in GDP has fallen from 60.7% in 2008 to 56.5% in 2022.

Key points

• Key points:
• The most recent forecasts by BBVA Research suggest that while GDP will be 6.4% above 2019 levels in 2025, private consumption will increase by only 4.3%.
• Numerous studies have shown that consumption drops off after reaching the age of retirement. Older people tend to be less mobile and produce many of the services they consume.
• Other factors affecting savings decisions within developed economies include the availability of affordable social benefits, such as health care, the peace of mind of having a sufficient pension, and access to cheap housing.
• Relying on other demand components for growth is not necessarily a bad thing, although its sustainability is uncertain and the welfare effects are more troubling.
• The problem for Spain is that most of its trading partners are experiencing a similar ageing problem, so the world will belong to those who produce more and do better with less.

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