■ Spanish GDP grew by 0.3% q/q in Q4 2013 (-0.1%y/y) according to the preliminary estimates of the National Statistics Institute (INE). As expected, growth accelerated after the economy rebounded in Q3 (+0.1% q/q) after 9 consecutive quarters of recession. For 2013 as a whole, activity is expected to have contracted by 1.2%.
■ GDP breakdown by components will only be released by the end of February when final figure will be known. Still, one might expect a stronger contribution from domestic demand. In Q3, already, domestic demand was the main driver of growth, something that did not happen since Q2 2010.
■ Recent hard data and survey suggest that this trend was probably confirmed in Q4. Positive reading of services PMI –surging to 54.2 in December after 51.5 – along with stabilisation in the unemployment rate (at 26%) and low inflation support the possibility of a rebound, albeit modest, in private consumption.
■ Regarding investment, strong exports growth in recent quarters coupled with buoyant new industrial orders also point to an increase. However, capital expenditures should have remained constrained by the scarcity of credit and the low, even though increasing, rate of capacity utilisation in the industrial sector.
■ The Q4 momentum is consistent with our forecast of a 0.8% GDP growth in 2014. The main risk to the outlook is a weaker than expected international environment, especially in emerging markets. Indeed, the Spanish export sector weathered the Eurozone debt crisis by diversifying its sales destination towards emerging markets, notably China and Brazil. And, even though domestic demand is improving, growth should remain primarily driven by net exports in 2014.
BY Thibault MERCIER
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