Spain | The slow recovery of private consumption

In contrast to the dynamism of government expenditures and service exports observed in recent years, the poor performance of private consumption stands out, only slightly better than that of investment.

Key points

• Key points:
• Given that much of GDP growth is due to the increase in the labor force and employment, private consumption per capita performance is even more disappointing: 7-tenths below its level at the end of 2019 and almost 3 points from the peak it reached at the end of 2007.
• The savings rate has risen again to 13.3% of the gross disposable income forecast for 2024, 4.6 points above its average between 1999 and 2019. Current savings levels have only been observed in contexts of high uncertainty.
• During these years, the Spanish economy has undergone significant changes that may account for the levels observed in consumption and savings patterns. Some of these changes will be temporary, but others may be more permanent.
• Disposable income and financial wealth have increased more among the population over 65 years of age, for whom consumption is less sensitive to economic cycles. Income and wealth improvements in that segment have mostly been allocated to savings.
• In addition, much of the growth is due to immigration, which explains more than 90% of the increase in the labor force since 2021. Although we do not have detailed studies to know the impact of this demographic change on consumption, this group may save because they face greater uncertainty or to transfer remittances to their countries of origin. Furthermore, regulatory, fiscal and technological uncertainties could explain why certain components of consumption have not recovered.

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