Country Economic Forecasts > Spain

Preliminary data show that GDP rose 0.8% on the quarter in Q4 last year, the same as in Q3. As a result, GDP expanded 3.2% in 2015, the strongest result in eight years, making Spain the fastest-growing of the major advanced economies and well above the Eurozone average.Growth in the short term continues to be fuelled by strong tailwinds, namely the ultra-loose monetary policy of the ECB and the plunge in oil prices, the latter particularly beneficial to Spain given its dependence on imported energy. As a result, the economy is growing at a robust pace, led by strong private consumption as households benefit from job creation, positive sentiment and a boost to real disposable income from low inflation. Furthermore, exports continue to show resilience despite global headwinds.That said, we expect growth to slow gradually. The political situation is adding an element of risk, following the elections in December in which the ruling conservative Popular Party won a victory but was well below a majority of seats. The Socialist Party, which came second, has been asked to form a government and has started coalition talks with several groups. But given the highly-fragmented parliament, it will be very difficult to reach an agreement and we think there is a substantial risk that new elections will be called soon. Although our central scenario does not see a radical shift in policy, the political impasse increases the chance of policy inaction, which would slow the recovery and add risks to fiscal sustainability over the long term. As a result, we have lowered our 2016 GDP forecast slightly to 2.8%.