The Spanish economy expanded more than expected in 2022’s fourth quarter, but there were increasing signs that still-high inflation and rising interest rates took a toll at year-end despite government support and lower energy prices.
Spain’s gross domestic product grew 0.2% in the fourth quarter compared with the previous three-month period, preliminary data from the country’s statistics office INE showed Friday. This is the same growth rate it recorded in the third quarter, which was upwardly revised from an initially estimated 0.1% expansion.
Economists polled by The Wall Street Journal expected GDP to grow by 0.1% in the fourth quarter.
Despite the overall gain, consumer spending declined by a sharp 1.8% on quarter, while investment decreased 1.2%, INE data showed, suggesting that the erosion of households’ purchasing power and rapidly increasing interest rates weighed on activity.
The economy grew 5.5% in 2022 as a whole compared with the previous year, INE said.
Spain’s economy, the eurozone’s fourth-largest, is likely to slow in 2023 as activity is further hurt from rapidly rising interest rates. Still, the country is expected to avoid a recession, and growth is likely to be higher than in other eurozone economies, economists say.
Spain’s Independent Authority for Fiscal Responsibility, the country’s fiscal watchdog, expects the economy to expand by 1.6% in 2023.
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