Spain | The Cyclical Behavior of GDP and Consumption up to the Second Quarter of 2024

This Observatory evaluates the factors explaining the cyclical behavior of GDP and private consumption in Spain up to Q2 2024. It analyzes the supply and demand factors behind the GDP per working-age person (PET) gap of -1.3 pp from its trend level and the weaker performance of consumption compared to pre-pandemic levels.

Key points

• Key points:
• The GDP per working-age person (PET) gap relative to its trend level stands at -1.3 pp in Q2 2024, while the year-on-year growth rate of GDP per PET exceeded its trend average.
• Supply shocks have contributed negatively, accounting for approximately -0.2 pp of the year-on-year growth in GDP per PET in Q2 2024. In the first half of 2024, the positive contribution of lower price margins and total factor productivity (TFP) were the main drivers of GDP per PET growth.
• Demand shocks in consumption and housing, along with credit, have also contributed positively to GDP growth.
• Private consumption per PET has yet to recover to its pre-pandemic level, standing 4% below Q4 2019 levels and 6.2% below the peak reached in Q4 2007.
• Despite the positive contribution of supply factors, the slower growth of private consumption compared to GDP has been driven by the negative contribution of demand factors. Notably, changes in consumption and housing preferences likely reflect the disincentive to purchase housing due to rising property prices and improved expectations about the general economic situation.

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