19th May 2024
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The Spanish economy returns to pre-pandemic levels

The Spanish economy returned to pre-pandemic levels during the first quarter of this year, growing more than previously estimated, official data showed on Friday, boosting the government ahead of the general election due to be held on 23 July.

Gross domestic product (GDP) expanded by 0.6% from January to March, the National Statistics Institute (INE) said, revising the first quarter rate up from a preliminary estimate of 0.5% issued in April.

‘We have recovered the level of our pre-pandemic GDP,’ Economy Minister Nadia Calviño said in a video message [see Tweet below], adding that growth had picked up in the first quarter because Spanish firms had improved their competitiveness.

The growth was fuelled by a 5.7% increase in exports in the first quarter, after falling 1% in the final quarter of 2022, and a 1.8% increase in business investment.

This offset a 1.3% fall in household consumption, as rising prices led people to curb spending in the eurozone’s fourth-biggest economy.

Spain was the European country hardest hit by the Covid-19 pandemic, with its GDP falling by 10.8% in 2020 as Covid-19 travel restrictions hit its key tourism sector hard.

But a global rebound in tourism has allowed the Spanish economy to resist the slowdown sparked by Russia’s invasion of Ukraine better than most of its neighbours.

Spanish GDP in the first three months of 2023 grew 4.2% from a year earlier, up from its previous estimate of 3.8%. By comparison the euro area was in a technical recession in the first two quarters of 2023.

The Bank of Spain on Monday revised its economic growth forecast for 2023 from 1.6% to 2.3% as activity picked up more than expected at the start of the year, with energy costs easing and tourist visits on the rise.

Socialist Prime Minister Pedro Sánchez is making Spain’s good growth figures a central plank of his campaign to be re-elected in the election on 23 July. The government has forecast 2.1% growth for this year.

Sánchez announced the general election after his PSOE party and left-wing coalition partner Podemos suffered disastrous results in the 28 May local and regional elections.

Polls suggest the main opposition right-wing People’s Party (PP) will win the election but will need the support of the far-right Vox group to form a working majority in parliament.

Image of La Rambla in Barcelona during the day of Sant Jordi, 23 April 2023. (Mònica Moreno)

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