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Economy in Brief

Spain's GDP Progress Slips Sideways
by Robert Brusca  May 18, 2011

At 1.2% at a compounded annual rate Spain's GDP is advancing in 2011-Q1. But the pace is not impressive and the momentum is lacking as well. While Europe frets and stews over Greece the IMF warns that the debt crisis could spread to the EMU core and as the IMF struggles with its own bureaucratic nightmare Spain's growth limps along. And this is a large EMU member country, one worthy of attention. The consumer sector is the backbone of Spain's spending as household expenditure makes up nearly 59% of GDP Spanish. Yet in 2011 Q1 the pace of that spending went dead flat.

Non-Profit spending that makes up 21% of GDP carried the load in Q1 as that spending grew by 5.7% boosting GDP by 1.2% and producing essentially al the boost to GDP in 2011-Q1. But Spain is a country putting austerity measures in place so it is unlikely that spending by nonprofit organizations can continue to be such a large part of GDP, let alone all of the growth.

Spain's export growth continues to outstrip import growth. The added pace of exports has added to GDP growth in the recovery period. But the trade balance is still in deficit. Overall domestic demand continues to be weak. In Q1 2011 domestic demand turned positive after two quarters of declining. The Yr/Yr growth for domestic demand is still crippled and persistently shrinking. Spain's 'recovery' clearly is on unstable footing.

While the preoccupation in the Zone has been with Greece, Spain is a more important economy to the Zone in terms of size. Concerns that Greece's debt problems could cause it to throw in the towel on the e-Zone are a reason for Greece to get an outsized amount of attention. But keeping Spain among the living breathing and prospering euro-economies is still a very important goal especially as Portugal has succumbed to market pressures and is tapping the now-strained stabilization fund. For now Spain appears to be on the razors edge of growth. Spain may not be in the eye of the market speculator at the moment and that is a good thing. But Spain is just barely getting by.

Spain's GDP
    HouseH Consump NonProfit Gross Trade
  GDP Expend Public Consump Fixed
Invst
X-M:
bns
Export Import Domestic
Demand
% Change Q/Q SAAR; X-M is Q/Q Change in Blns of Euros
Q1-2011 1.2% 0.0% 5.7% 5.3% -5.6% 0.5 21.6% 16.3% 0.2%
Q4-2010 0.9% 1.1% -2.8% -2.4% -5.7% 1.2 16.6% 6.6% -1.6%
Q3-2010 -0.1% -3.8% -2.9% -1.5% -10.6% 3.3 2.0% -16.2% -6.4%
Q2-2010 1.3% 6.0% 4.6% 2.6% -1.2% -2.0 5.6% 17.8% 5.3%
% Change Yr/Yr; X-M is Yr/Yr Change in Gap in Blns of Euros
Q1-2011 0.8% 0.7% 1.1% 1.0% -5.8% 3.0 11.2% 5.2% -0.7%
Q4-2010 0.6% 1.7% -0.9% -0.3% -6.1% 2.4 10.5% 5.3% -0.6%
Q3-2010 0.2% 1.6% -0.7% 0.4% -6.7% 1.9 9.4% 5.0% -0.7%
Q2-2010 0.0% 2.2% -0.1% 1.1% -6.7% 0.1 11.9% 9.6% -0.1%
5-Yrs 0.5% 0.2% 3.3% 1.9% -5.3% N/A 2.7% -1.0% -0.7%
% of GDP 100.0% 58.7% 21.5% 1.0% 21.5% -2.9% 33.1% 36.0% 102.9%
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