BdE published its monthly bulletin for July. Although all of the tables are quite interesting, i will focus on the GDP and money market statistics.

The economic deterioration is quite clear. Fixed investment shows an accelerating decline while final consumption has now turned negative, although not at levels seen in 2009. Government consumption is declining strongly, making a significant negative contribution to growth, something which is certain to become stronger after the July austerity measures and the bailouts of regional governments (which require further cuts in regional budgets). Exports have been the main source of demand for the Spanish economy but even they show a clear pattern of decline (with growth in the Euro area turning negative), lowering the prospects for the general economy.

More detailed data show that the decline in investment is not confined to construction anymore but includes other sectors as well. The decline in exports growth can mainly be accounted by goods, although services are also showing signs of trouble.

BdE projections for Q2 are negative:

«On preliminary estimates, based on still-incomplete information, economic activity in Spain fell again in Q2. The pace of decline was estimated to be sharper than that of the two previous quarters, with a quarter-on-quarter rate of change of -0.4%. National demand fell off more markedly than in the previous quarter (-1.2% against -0.5%), since household spending and general government demand shrank at a quicker pace. As has been the case in recent years, net external demand softened the adverse impact of the decline in national demand on GDP, as it made a positive contribution of 0.8 pp, up on that of the previous quarter, thanks to a moderate pick-up in exports. In year-on-year terms GDP declined by 1%, set against -0.4% in Q1.»


The money market data show that conditions in Spain have worsened in May and June. Unsecured financing seems to only be available for terms up to one month while secured financing up to 3 months. Unsecured loans interest rates increased from 0.48% to 0.83% while repo rates from 0.20% to 0.32% for 1 month, 0.21% to 0.77% for 2 months and 0.45% to 0.93% for 3 months. It is clear that counterparty risk has increased heavily and lenders are anticipating troubles in the summer.