Final data published by the National Statistics Institute (INE) showed that the economy expanded by 0.6% in the 4th quarter, confirming economists' forecasts, and recording the strongest growth since the 2nd quarter of 2022. In the 3rd quarter, GDP increased by 0.4%. Meanwhile, in annual terms, economic growth accelerated to 2.0% (in line with the preliminary estimate and economists' forecasts) from 1.9% in the 3rd quarter. Looking at the full year of 2023, Spain's economy grew by 2.5%, a notable slowdown compared to the 5.8% growth seen in 2022.
INE stated that the contribution of domestic demand to year-on-year GDP growth was 2.1 points, while external demand contributed 0.1 negative points. Household consumption increased by 0.2% QoQ, slowing sharply compared to the 3rd quarter (+1.2% QoQ). Meanwhile, the growth rate of government spending slowed to 1.0% QoQ from 1.6% QoQ. Investments in fixed assets fell by 1.6% (the largest decrease in a year), which was caused by a decrease in investments in construction activities and equipment, capital goods, weapons systems and cultivated biological resources. Investments in intellectual property products have also declined.
Last month, the Organization for Economic Co-operation and Development (OECD) has revised its growth forecast for Spain upward by one-tenth of a percentage point in 2024, which it now estimates at 1.5%, after the 2.5% growth in 2023, while it maintains expectations of a rebound in activity to 2% by 2025. The OECD's updated forecasts maintain Spain as the best-performing large economy in the eurozone this year and next, and it is the only one to have seen its growth forecast for 2024 revised upwards.