Spain: Political uncertainties contrast with a solid economic outlook – BNP Paribas

“In Spain, political uncertainties contrast with a solid economic outlook. Activity slowed last year but stood up well with GDP growth nearly one point above Eurozone average,” said BNP Paribas in a recently published analysis.

Key quotes

“Activity is not sheltered from the European downturn and the slowdown in trade. To the contrary, manufacturing output, merchandise exports and productive investment spending have weakened. The tourism sector remains an engine of growth but also lost some steam in the last quarters.”

“By contrast, domestic demand, especially from households, is the main contributor to the current pace of growth. Several factors are supporting private consumption, first of them being strong job creations.”

“Early general elections are now held only one month ahead of municipal, local and European elections planned for the end of May.”

“The PSOE  is currently leading in the polls, although with voting intentions lower than those received by the Popular Party when it won the previous elections.”

“All in all, it seems that the fragmentation of the Spanish political landscape further increased over the last years. At this point, many options are open for the outcome of the elections. Negotiations to build a ruling coalition and form a government could take time and take us by surprise.”