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Wednesday, September 28, 2022

INE boosts GDP: Economy grew 6.8% year-on-year in Q2, five tenths more

Powerful upward revision of development in Spain. Spanish GDP Register Variation of 1.5% in the second quarter of 2022 Compared to the previous quarter in terms of volume (inflation or GDP deflator discount). This rate is 1.7 points higher than the rate recorded in the first quarter (that the INE has revised downwards with a contraction of -0.2%) and is four tenths higher than the figure increased last July. This is due to the increased growth More like, For better performance of exports than decline in imports. On the other hand, Year-on-year change in GDP stood at 6.8%, compared to 6.7% in the previous quarter. The rate is five tenths higher than the rate advanced on July 29, reports the National Institute of Statistics.

The contribution of national demand to GDP growth year-on-year stood at 1.9 points, down 1.9 points from Q1. In contrast, foreign demand contributed 2.1 points more than the previous GDP publication. Thus, the entire upward revision of the data is thanks to the improved performance of the export.

It should be borne in mind that in terms of national accounting, the expenditure of tourists in Spain Counts as ‘export of tourist services’Which represents a significant contribution to the national economy, especially when compared to 2021, when travel restrictions were still very strict.

External demand has contributed 4.9 points, up 2.1 points over the previous quarter. The INE has significantly revised Spain’s exports upward (they enter the GDP equation with a positive sign), while it has greatly reduced imports, which is recorded by subtracting the equation as follows: Gross Domestic Product = Final Consumption Expenditure + Gross Capital Formation (Investment) + Exports – Imports. Strange as it sounds, a simple drop in imports, other things being equal, triggers a higher GDP figure.

So with this amendment comes an unexpected turn of events. Foreign demand has become the main contributor to GDP growth, contributing 4.9 points (compared to 3.6 in the first estimate), while domestic demand contributed only 1.9 points (compared to the 2.6 they estimated earlier). contributed to).




Foreign demand pulls up GDP

Although the GDP figures are positive, this decline in domestic demand may be a reflection of the national consumer Have started saving as a precaution In the face of future expectations about growth and employment that are declining at a compelling pace.

Whose product has this downward revision in the first quarter been? investment crash (Gross Capital Formation), a decline that was not previously included in INE publications and which is now projected to decrease by 5% compared to the last quarter of 2021.

Spain contracted in the first quarter

In addition, INE has revised downwards growth for the first quarter of 2022, when Economy contracted by -0.2%, compared to the 0.2% expansion announced in the previous publication. This fall in GDP in the first quarter ‘inflates’ the growth in GDP (rate of quarterly change) in the second quarter.

In this case, the downside correction is due to investment collapse (gross capital formation) While previous publications had calculated a positive investment growth, the latest review (published this Friday) concludes that investment has declined by 5%. This drop in investment was 100% responsible for the decline in the first quarter.

inflation and employment

On the other hand, implicit GDP deflation rises to 3.6 percent (due to increased inflation). Compared to the same quarter of 2021, three tenths more than in the previous quarter.

Employment in the economy, in terms of working hours, registered a quarter-on-quarter difference of 1.1%. This rate is lower in the case of full-time equivalent jobs (1.0%, which is 1.1 points higher than the first quarter) due to an increase in average full-time working hours (0.1%).

In year-on-year terms, working hours increased by 3.3%, down 3.7 points compared to the first quarter of 2022, and full-time equivalent positions increased by 5.2%, a tenth decrease compared to the first quarter . This represents an increase of 939 thousand full-time equivalent jobs a year.

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