Spain's Q3 GDP Growth: A Domestic Demand-Driven Recovery

Spain's Q3 GDP growth rate of 0.8% has been confirmed, marking a strong performance driven by domestic demand and higher productivity. This quarterly growth is in line with the previous quarter and exceeds market expectations, further cementing Spain's position as one of the Eurozone's growth engines.

Domestic demand, particularly consumption, played a significant role in Spain's Q3 GDP growth. According to BBVA Research, consumption offset the sluggishness in investment, contributing significantly to the overall growth. This trend aligns with the robust labour market, which boosted consumption as the unemployment rate decreased to 11.21%, the lowest level since the financial crisis.

Investment and net external demand had a lesser impact on Spain's Q3 GDP growth. Investment contributed negatively to GDP growth, while net external demand had a slightly negative impact. This suggests that Spain's economic recovery is primarily driven by internal factors, with investment and external demand playing a lesser role.

Productivity and hours worked also influenced Spain's Q3 GDP growth. The economy grew by 0.8% due to higher productivity, as hours worked increased by 0.2%. This indicates that Spain's economic growth is not solely reliant on increased labor input but also on improved efficiency.

Spain's Q3 GDP growth rate of 0.8% confirms its position as one of the Eurozone's growth engines. This rate matches the Q2 2024 growth, exceeding market expectations by 0.2 percentage points QoQ, resulting in 3.4% YoY growth. Spain's strong performance is driven by domestic demand, with consumption offsetting sluggish investment. The contribution of net external demand was slightly negative. This growth is supported by a robust labour market, with the unemployment rate decreasing to 11.21%, the lowest level since the financial crisis.

Spain's economic resilience is further evident in its net lending as a percentage of GDP, which reached its highest level since 1995 in 2023, driven by improvements in the trade balance and services. Despite global uncertainty, Spain's negative net international investment position declined to 52.8% of GDP, its lowest level in 19 years. This growth trajectory positions Spain favourably relative to other Eurozone countries, with a projected GDP growth of 2.8% for 2024.

In conclusion, Spain's Q3 GDP growth rate of 0.8% is a testament to the country's economic resilience and domestic demand-driven recovery. As Spain continues to navigate global uncertainty, its strong performance relative to other Eurozone countries positions it well for future growth and investment opportunities.