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2011 Q1 the Spanish economy up 0.3 % (Q on Q) 0.8 % (Y on Y)

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In 2011 Q1 the Spanish economy continued along the path of moderate recovery embarked


upon a year earlier, with quarter-on-quarter GDP growth of 0.3 %, which took the year-on-year


rate to 0.8 %. This trajectory was once again underpinned by the strength of net external demand,


which contributed 1.4 pp to year-on-year GDP growth, while domestic demand continued


to display considerable slackness, interrupted only by a rise in government consumption.


The data available for Q2 suggest that activity weakened, against a background marked


by the worsening of the sovereign debt crisis in the euro area. Estimates based on the


conjunctural information available indicate that GDP posted a quarter-on-quarter growth


rate of 0.2 %, with the year-on-year rate standing at 0.7 %. On the expenditure side, the


slowdown in activity would have been a consequence of the decline in national demand


(-1.9 % year-on-year), which was more pronounced than in Q1, while the positive contribution


of net external demand rose to 2.6 pp. It should be noted that the year-on-year rates


for this quarter are affected by the exceptional volume of spending in the same period of


last year, in anticipation of the rise in VAT on 1 July and the imminent ending of various


government programmes to support spending (including Plan 2000E, which provided direct


support for car purchases).


On the supply side, the weakening of industrial activity was notable, partly due to the discontinuity


in productive processes prompted by the scarcity of certain inputs following the


earthquake in Japan in March and the disruption of agricultural production caused by the EU


food crisis. Market services, for their part, continued to display a moderate recovery, while


the value added in construction fell again, although at a lower rate than in the preceding


months. In these circumstances, employment declined in year-on-year terms (by -0.9 %,


according to the EPA) although it stabilised in quarter-on-quarter terms, owing to the more


favourable behaviour of employment in services, and the rate of unemployment posted a


small decline (to 20.9 % of the labour force). Inflation turned downward in Q2, confirming the


temporary nature of some of the price rises in the middle months of 2010. After rising in April


and May, the CPI excluding energy and unprocessed food prices decelerated in June to


stand at 1.7 %, a trend that will most probably be extended over the coming months, once


the effect of the increase in VAT in July last year on prices is absorbed. In this respect, the


leading indicator of the CPI showed a further reduction in July, to 3 %.


http://www.bde.es/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/BoletinEconomico/11/Jul/Files/coye.pdf


 

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