Spain | Remaining resilient, but for how much longer?

Industry is holding firm, investment is rising and the summer promises record growth in Spain, all of which has delayed the expected fall in GDP — at least until the end of September. Nonetheless, a number of factors continue to stoke fears of a recession.

Key points

• Key points:
• The shortage of intermediate goods has seen the production of automobiles and related components fall by 25% from the levels seen at the start of 2020. The aeronautics and railway components industries have experienced similar corrections.
• There has been a change in industry’s production model, driven by the fall-out from the pandemic and the need for transformation toward an environmentally sustainable economy.
• The positive performance of tourism, particularly from overseas, stands out. It is very likely that non-resident consumption will have returned to pre-pandemic levels during the second quarter of 2022.
• However, doubts remain about how much longer the economy can keep going. The fears now are not about the high price of energy, but more directly about its availability. There is an increasing probability of there being no Russian gas in Europe.
• A couple more negative factors should also be included in this scenario. The first is that inflation can no longer be explained by energy price rises alone and is now generalized — with a likelihood of it continuing well into next year. The second is the rise in cost of funds announced by the ECB.

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