The Spanish economy surprised in the second quarter of the year by growing by 0.7%, one-tenth more than in the previous quarter, despite the uncertainty - both domestic and, especially, international - reaching record levels, even higher than those recorded in the worst moments of the covid-19 pandemic, according to data published this Tuesday by the National Institute of Statistics (INE).
The GDP thus avoids deceleration that it had experienced between January and March when it went from growing at a rate of 0.7% in the last two quarters of 2024 to advancing 0.6% in the first of this year. Taking into account the second decimal, the rebound from April to June has been the highest since the second quarter of last year, specifically 0.73%.
This interquarterly GDP growth allows maintaining the year-on-year advance of 2.8%, demonstrating that the economy has interrupted the slowdown process that had started this year when it went from advancing at a rate of 3.3% in the last three quarters of 2024 to 2.8% in the first. As always, this growth does not take into account inflation, as without subtracting the price increase, GDP growth has been 5.6%.
All the country's growth was due to the boost from domestic demand. In fact, if it were only for national demand, the Spanish economy would have grown by 3.4% year-on-year, but the external (the balance of what we export minus what we import) subtracted 0.6 points from growth in a context of the imposition of new tariffs by the United States that are already affecting our foreign sales.
In the previous quarter, external demand had subtracted 0.4 points from GDP growth, exacerbating its negative contribution after the consolidation of tariffs such as the 50% imposed by the US on steel and aluminum or the 10% in effect since April for all products - in addition to the 4.8% tariff applied last year.
The data published this Tuesday by the INE has exceeded expectations. The Bank of Spain, for example, had projected in its latest macroeconomic report an increase of "between 0.5% and 0.6%", after revising downwards its forecasts due to "the lower dynamism now projected for foreign markets and the impact of uncertainty associated with the commercial environment and economic policies," among other factors.
Meanwhile, the automatic projection model of the Independent Fiscal Responsibility Authority (AIReF), called MIPRed, coincided in forecasting a growth of 0.5%, equivalent to a 2.4% year-on-year increase; while BBVA Research anticipated in its latest report on the situation of the Spanish economy that "GDP growth in the second quarter of the year would remain at similar levels to those of the last two quarters (0.6%)," according to its calculations.
In interquarterly terms, the Spanish economy would have grown by 0.9% if it were not for external demand, which subtracted one-tenth from the increase.
Household final consumption expenditure increased by 0.8%, while that of Public Administrations - responsible in recent years for a significant share of GDP growth - decreased by 0.1% compared to the first quarter of the year. The largest growth was in investment, measured by gross fixed capital formation, which rose by 1.6%.
Within the latter, investment in construction showed the most dynamism, with an increase of 2.8% compared to the previous quarter.
Regarding external demand, exports of goods and services grew by 1.1% in the quarter (compared to a 1.7% increase in the previous one), but as imports increased at a faster pace (by 1.7%), the combined contribution was negative.
On the supply side (of the productive sectors), all presented positive rates except for the primary branches (agriculture, livestock, fishing, and forestry), whose value added fell by 9.5% between April and June. However, industrial branches grew by 0.8% - with a manufacturing increase of 1.1%, three tenths more than in the previous quarter-; construction grew by 1.5% (one point more than in the previous quarter) and services rose by 1.2% (also one point more).
GDP can be analyzed from three perspectives. The first is demand, where GDP is the result of adding private consumption, investment, public spending, and external demand (exports minus imports); the second is supply, where GDP is the result of adding the value added of all productive branches (primary, industrial, construction, and services), and the third is from the perspective of income, where GDP must coincide with the sum of employee compensation, gross operating surplus (the part of income obtained by productive units - companies - that is not used to pay their workers), and taxes on production and net imports of subsidies.
This last analysis shows that in the second quarter, the highest year-on-year growth occurred in employee compensation, which increased by 7.6% year-on-year, as a result of the increase in the number of people working (3.7% more full-time equivalent salaried positions) and higher wages (average compensation per position increased by 3.8%). Meanwhile, gross operating surplus, gross mixed income, increased by 3.2%, and taxes recorded a growth of 6.2%.