November 25, 2020

GDP registers a historical growth of 16.7% in the third quarter driven by consumption


The Gross Domestic Product (GDP) generated by the Spanish economy registered a quarter-on-quarter growth of 16.7% in the third quarter of 2020. This rate is 34.5 points higher than that estimated for the second quarter (−17.8%) . The contribution of national demand to year-on-year GDP growth is −7.8 points, 11.0 points higher than in the second quarter. For its part, external demand presented a contribution of −0.9 points, 1.8 points more than in the previous quarter.

Final consumption expenditure decreased 6.8% compared to the same quarter of 2019. This rate is 11.0 points higher than that of the second quarter. Household final consumption expenditure registered an interannual rate of −10.4%, 14.8 points more than in the previous quarter.

With the strong advance in GDP in the third quarter, once the state of alarm has ended, Spain comes out of the technical recession in which it entered the second quarter of the year after having recorded two consecutive negative quarters, with falls in the economy 5.2% in the first quarter and 17.8% in the second.

The quarterly increase in GDP in the third quarter, which the INE must confirm on December 23, exceeds the forecasts that the Government managed, which pointed to quarterly growth of around 13%.

In year-on-year rate, GDP for the third quarter contracted by 8.7%, compared to the decrease of 21.5% in the previous quarter. This is the second largest year-on-year decline in the entire series after that registered in the second quarter of this year.

Quarterly data show a historical rise in household consumption of 20.7%, in contrast to the decline, also historical, that this indicator registered in the second quarter (-20.4%). For its part, public spending increased between July and September by 1.1%, eight tenths more than in the second quarter, while consumer spending by non-profit institutions and at the service of households fell by 0, 4%, compared to the 0.2% increase in the previous quarter.

Investment, on the other hand, registered a historical advance of 19.9% ​​in the third quarter (-22.1% in the second quarter), with a record increase of 34.7% in the case of investment in machinery and equipment goods. Investment in housing, for its part, grew by 16.6%, compared to the decline of 22.6% in the second quarter.

The INE points out that the situation caused by the coronavirus makes certain variables, such as hours actually worked, more relevant at the present time when measuring the evolution of employment. “It is considered that this variable, compared to full-time equivalent jobs, is the one that most clearly reflects the effects induced on employment by the pandemic and the successive measures adopted to combat its effects,” he says.

Employment in the economy, in terms of hours worked, shot up 24.7% in the third quarter compared to the previous quarter. This rate is smaller than that of full-time equivalent jobs (16%, which is 33.7 points more than in the second quarter) due to the increase observed in average full-time hours ( + 7.5%).

In interannual terms, hours worked decreased 6.2%, a rate 18.7 points higher than in the second quarter. For their part, full-time equivalent jobs fell by 5.5%, that is, 12.9 points more than in the second quarter, which means that 1.01 million equivalent jobs have been destroyed in one year full time.

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