The Spanish economy expanded by 5% in 2021, according to provisional data on the Gross Domestic Product (GDP) released this Friday. Although it is far away and represents the largest increase since 2000, if confirmed, growth will not reach the level forecast by the Government for the second year of the pandemic, which pointed to 6.5%.
According to the data advanced by the National Institute of Statistics (INE), the economy does not recover in 2021 even half of the ground it lost in 2020, although it will be necessary to wait until March 25 to have the definitive data. On this occasion, the variation between the advance and the confirmed data could be greater than normal due to the fact that the volume of information advanced in today’s forecast has been less than on previous occasions for reasons related to covid and the availability of some of the sources, explained Statistics.
In provisional data, national demand contributed 4.6 points to GDP in the year, 13.2 points more than it did in 2020, while external demand contributed 0.4 points, 2.6 points above the previous exercise.
At current prices, GDP in 2021 stood at 1,202,994 million euros, 7.2% more than in 2020.
Greatest increase in household consumption since 1999
Statistics indicate that household consumption registered a growth of 4.7% last year, which represents its greatest annual advance since 1999. Public spending, for its part, increased at a rate of 3%, three tenths less than in 2020, and has already accumulated seven consecutive years of expansion.
Investment also returned to positive rates in 2021, when it grew by 4.1%, in contrast to the 9.5% drop in 2020.
In the analysis by economic sectors, services led growth in 2021, with an increase in gross value added of 5.9%. They were followed by industry (+5.3%). Construction and agriculture, on the other hand, recorded falls of 4.1% and 5.5%, respectively.
GDP moderated in the fourth quarter
The GDP moderated its advance in the last quarter of the year, rising 2%, . In interannual rate, in the fourth quarter it advanced by 5.2%, almost two points above the previous quarter (3.4%), driven by a greater contribution of national and external demand.
In this calculation, the contribution of domestic demand to year-on-year GDP growth was 3.6 points, 1.1 points more than in the third quarter, and external demand contributed 1.7 points, eight tenths more.
The behavior of household consumption in the fourth quarter was surprising, falling by 1.2%. That quarter coincides with the impact of omicron from December and with the incessant rise in inflation, reasons that would explain the slowdown. In the year-on-year comparison, its growth moderated three tenths in the fourth quarter, to 2.4%.
Public spending slowed its advance by almost two points, to 1.3%, its smallest increase since the third quarter of 2017. Faced with these falls, investment starred in the opposite development and grew by 3.7% compared to the decline of 0 .6% that was recorded in the third quarter.
The quarterly development by sector reflects increases in Agriculture (+9%), Industry (+2.%), Services (+1.8%) and Construction (+1.6%).
At current prices, GDP exceeded pre-pandemic levels in the fourth quarter and reached 310,030 million euros: 4,007 million more than in the closing quarter of 2019.
Hours worked grew by 2.9% year-on-year
The remuneration of employees presented an interannual growth of 6.8% in the fourth quarter, seven tenths higher than the previous quarter. This is due, on the one hand, to the 6.5% increase (one tenth more than in quarter three) in the number of employees, in terms of full-time equivalent positions, and, on the other, to the fact that the average remuneration per employee it varied by 0.3%, compared to -0.3% in the previous period.
Employment in the economy, in terms of hours worked, registered a quarter-on-quarter variation of 0.2%. This rate is greater in the case of full-time equivalent jobs (1.3%, 2.6 points less than in the third quarter) due to the reduction observed in the average full-time hours (-1.2%).
In year-on-year terms, hours worked grew by 2.9%, a rate four tenths lower than that of the third quarter of 2021, and full-time equivalent positions grew by 6.4%, two tenths more, which represents a increase of 1.12 million full-time equivalent jobs in one year.
The interannual variation of the unit labor cost (how much each worker costs the company based on their productivity) stood at 1.4% this quarter.
Waiting for the data to be confirmed in March… it is far from the Government’s forecast
While waiting for the definitive data, if +5% is confirmed, the Government’s forecast would not be met. The last update of the Government’s stability program contemplated a macroeconomic scenario with “a robust growth path in the forecast horizon, particularly in 2021 (+6.5%) and 2022 (+7%)” and leaves for “the end of 2022” the recovery of activity levels prior to the pandemic.
The return to positive rates in the annual record does not meet the Executive’s expectations but it is above the forecasts of several international voices, such as arrivals from or , which revised their growth forecast for Spain downwards at the end of the year and placed it at 4.6% for last year.
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