MARKET FORECAST
SPAIN ECONOMIC SNAPSHOT Q3 2011
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
MIXED GROWTH
The Spanish economy grew by 0.2% over the quarter in Q2 following Q1’s upwardly revised 0.4% rise in GDP. Household spending posted a solid 0.6% growth, however, this figure reflected households saving less, as the labour market remains weak and fiscal austerity is still being felt by consumers. Overall, domestic demand contracted further in Q2 as steep falls in government spending and investment continue to prevail.
MARKET OUTLOOK GDP:
Growth will remain subdued as a result of fiscal austerity
INFLATION:
Inflation to continue rising over the year
INTEREST RATE:
ECB expected to start lowering rates
EMPLOYMENT:
Labour market conditions to deteriorate further
CONSUMERS DRIVE INDUSTRY
Augusts’ PMI suggests that manufacturing activity contracted for the fourth consecutive month and retreated to 45.3, a 19-month low. A large driver of the fall in PMI has been the further decline in new orders, particularly for exports as external demand from Spain’s major Eurozone trading partners continues to falter due to the ongoing sovereign debt crisis. Simultaneously, the survey revealed falling demand for labour in August. This news comes at a bad time as unemployment continues to rise while the labour market deteriorates further as a result of austerity measures curbing the number of public-sector jobs and private-sector employment unable to pick up the slack.
FISCAL REFORMS
The Spanish government has agreed to new austerity measures for 2011 worth €5bn to reinforce the budget deficit consolidation plan in 2011. The measures include bringing forward the calendar for corporate tax payments and a cut in the public sector’s pharmaceutical bill. Additionally, the value-added tax on new residential properties is to be cut from 8% to 4% through the rest of 2011.
OUTLOOK
It is increasingly likely that Spain’s export-driven recovery has peaked, while domestic spending continues to be too weak to drive expansion. GDP growth is expected to remain muted as fears over the contagion effects of a default on Greek sovereign debt looms. Spain’s economy will be dampened through financial market stress and confidence effects even if Spain does not default. For further information, please contact our Research Department: Cushman & Wakefield LLP 43-45 Portman Square London W1A 3BG www.cushmanwakefield.com
Economic Indicators*
2008
GDP Growth Consumer Spending Industrial Production Investment Unemployment Rate (%) Inflation US$/€ (average) US$/€ (end-period) Interest Rates: 3-month (%) Interest Rates: 10-year (%)
0.9 -0.6 -7.1 -4.8 11.3 4.1 1.47 1.39 2.8 3.8
2009
2010
-3.7 -4.3 -16.2 -16.0 18.0 -0.3 1.39 1.44 0.7 4.0
-0.1 1.3 0.9 -7.6 20.1 1.8 1.33 1.34 1.0 5.5
2011F
0.7 0.4 0.6 -4.8 21.3 3.1 1.41 1.41 1.6 4.5
2012F
0.8 0.6 1.1 -0.3 21.2 1.7 1.38 1.35 1.9 4.5
*annual % growth rate unless otherwise indicated. E estimate F forecast Source: Oxford Economics Ltd. and Consensus Economics Inc
ECONOMIC & POLITICAL BREAKDOWN Population GDP Public sector balance Parliament
45.9 million (2010e) US$1,409.9 billion (2010) -11.1% of GDP (2009) Partido Socialista Obrero Español (PSOE) King Juan Carlos Mr. José Luis Rodríguez Zapatero March 2012 (Parliamentary)
Head of State Prime Minister Election dates
ECONOMIC ACTIVITY 8.0
GDP growth (annual %)
Inflation (annual %) 8.0
6.0
6.0
4.0
4.0
2.0
2.0
0.0
0.0
-2.0
-2.0
-4.0 -6.0
2000
2002
2004
2006
2008 2010E 2012F
Inflation %
PMI CONTRACTS
ECONOMIC SUMMARY
GDP growth %
Industrial output, adjusted for calendar days, rose by 0.3% y-o-y in August for the first time in six months. Growth was largely attributed to a surge in capital-goods output. July’s decline in industrial production of 2.8% y-o-y reflected a fall in consumer durables output as consumers remained reluctant to make major purchases given the country’s weak real income development and stagnating economic activity.
-4.0 -6.0
Source: Cushman&Wakefield LLP. 2011
This report has been produced by Cushman & Wakefield LLP or use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. The report also refers to these economic sources: Consensus Economics Inc.; The Economist; Reuters; Capital Economics; Oxford Economics Ltd; Centre for Business & Economic Research. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. Should you not wish to receive information from Cushman & Wakefield LLP or any related company, please email [email protected] with your details in the body of your email as they appear on this communication and head it “Unsubscribe”. ©2011 Cushman & Wakefield LLP.
All rights reserved.
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
MIXED GROWTH
The Spanish economy grew by 0.2% over the quarter in Q2 following Q1’s upwardly revised 0.4% rise in GDP. Household spending posted a solid 0.6% growth, however, this figure reflected households saving less, as the labour market remains weak and fiscal austerity is still being felt by consumers. Overall, domestic demand contracted further in Q2 as steep falls in government spending and investment continue to prevail.
MARKET OUTLOOK GDP:
Growth will remain subdued as a result of fiscal austerity
INFLATION:
Inflation to continue rising over the year
INTEREST RATE:
ECB expected to start lowering rates
EMPLOYMENT:
Labour market conditions to deteriorate further
CONSUMERS DRIVE INDUSTRY
Augusts’ PMI suggests that manufacturing activity contracted for the fourth consecutive month and retreated to 45.3, a 19-month low. A large driver of the fall in PMI has been the further decline in new orders, particularly for exports as external demand from Spain’s major Eurozone trading partners continues to falter due to the ongoing sovereign debt crisis. Simultaneously, the survey revealed falling demand for labour in August. This news comes at a bad time as unemployment continues to rise while the labour market deteriorates further as a result of austerity measures curbing the number of public-sector jobs and private-sector employment unable to pick up the slack.
FISCAL REFORMS
The Spanish government has agreed to new austerity measures for 2011 worth €5bn to reinforce the budget deficit consolidation plan in 2011. The measures include bringing forward the calendar for corporate tax payments and a cut in the public sector’s pharmaceutical bill. Additionally, the value-added tax on new residential properties is to be cut from 8% to 4% through the rest of 2011.
OUTLOOK
It is increasingly likely that Spain’s export-driven recovery has peaked, while domestic spending continues to be too weak to drive expansion. GDP growth is expected to remain muted as fears over the contagion effects of a default on Greek sovereign debt looms. Spain’s economy will be dampened through financial market stress and confidence effects even if Spain does not default. For further information, please contact our Research Department: Cushman & Wakefield LLP 43-45 Portman Square London W1A 3BG www.cushmanwakefield.com
Economic Indicators*
2008
GDP Growth Consumer Spending Industrial Production Investment Unemployment Rate (%) Inflation US$/€ (average) US$/€ (end-period) Interest Rates: 3-month (%) Interest Rates: 10-year (%)
0.9 -0.6 -7.1 -4.8 11.3 4.1 1.47 1.39 2.8 3.8
2009
2010
-3.7 -4.3 -16.2 -16.0 18.0 -0.3 1.39 1.44 0.7 4.0
-0.1 1.3 0.9 -7.6 20.1 1.8 1.33 1.34 1.0 5.5
2011F
0.7 0.4 0.6 -4.8 21.3 3.1 1.41 1.41 1.6 4.5
2012F
0.8 0.6 1.1 -0.3 21.2 1.7 1.38 1.35 1.9 4.5
*annual % growth rate unless otherwise indicated. E estimate F forecast Source: Oxford Economics Ltd. and Consensus Economics Inc
ECONOMIC & POLITICAL BREAKDOWN Population GDP Public sector balance Parliament
45.9 million (2010e) US$1,409.9 billion (2010) -11.1% of GDP (2009) Partido Socialista Obrero Español (PSOE) King Juan Carlos Mr. José Luis Rodríguez Zapatero March 2012 (Parliamentary)
Head of State Prime Minister Election dates
ECONOMIC ACTIVITY 8.0
GDP growth (annual %)
Inflation (annual %) 8.0
6.0
6.0
4.0
4.0
2.0
2.0
0.0
0.0
-2.0
-2.0
-4.0 -6.0
2000
2002
2004
2006
2008 2010E 2012F
Inflation %
PMI CONTRACTS
ECONOMIC SUMMARY
GDP growth %
Industrial output, adjusted for calendar days, rose by 0.3% y-o-y in August for the first time in six months. Growth was largely attributed to a surge in capital-goods output. July’s decline in industrial production of 2.8% y-o-y reflected a fall in consumer durables output as consumers remained reluctant to make major purchases given the country’s weak real income development and stagnating economic activity.
-4.0 -6.0
Source: Cushman&Wakefield LLP. 2011
This report has been produced by Cushman & Wakefield LLP or use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. The report also refers to these economic sources: Consensus Economics Inc.; The Economist; Reuters; Capital Economics; Oxford Economics Ltd; Centre for Business & Economic Research. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. Should you not wish to receive information from Cushman & Wakefield LLP or any related company, please email [email protected] with your details in the body of your email as they appear on this communication and head it “Unsubscribe”. ©2011 Cushman & Wakefield LLP.
All rights reserved.
