Spain’s Economy Slows Dramatically, But Government Rules Out Recession
Spain’s economy slowed dramatically in the third quarter as GDP only grew 0.2%. A drop in household spending and weaker exports weighed on activity in the euro zone’s fourth-largest economy. Despite these figures, the Spanish government is showing more optimism than relevant institutions over the local economy’s forecasts and ruled out an imminent recession [it happens when a country has two quarters in a row of negative growth in its real GDP].
“There is no current economic indicator that points at that direction,” said the Minister for Economic Affairs and Digital Transformation, Mrs. Nadia Calviño. However, this contrasts with the forecasts from important ‘think tanks’ or local institutions such as AIReF, Funcas or BBVA Research, which foresee an economic contraction in Q4 2022, Q1 2023 or even in both periods.
Real Estate Investment in Spain Already Tops 2021
Real estate investors in Spain have already channelled more money so far this year than all of 2021, with a flurry of activity in recent months. According to a report by consultancy firm Cushman & Wakefield (C&W) transactions’ value reached €12.7 billion at the end of September, compared to the €11.9 billion booked in all 2021. Foreign investors account for 58% of the invested funds.
The €12.7 billion figure is the highest ever reported in any Q3 ever, even above the ones registered in the same periods from 2017 and 2018, when the sector’s property deals hit record levels. The report by C&W says that the huge liquidity in the real estate market, before interest rates increased earlier this year, is behind this exuberant performance. Economic uncertainty and monetary policy tightening by central banks could harm this momentum, according to C&W sources.
IBEX Firms Will Lead Europe’s Dividend Increase in 2023
Spanish IBEX corporations [the 35 largest companies in Spain by market capitalization] will be the ones in Europe to pay higher dividends to shareholders in 2023. These listed companies will be the only ones in Europe to apply no dividend reductions in the whole continent despite the economic slowdown. This scenario will lead to a decrease in revenues and profits in some of them.
According to Bloomberg, IBEX dividend per share will rise by 4.4% next year, above the expected 3.1% rise in the Dow Jones Industrial Average (DJIA) and 1.2% in the S&P 500. In Europe, dividends of listed companies are expected to drop by 1 to 18.2%. The important weigh of banks and utilities (which usually pay higher dividend yields) in the IBEX explains the better performance of Spanish firms in terms of shareholder’s remuneration despite the current economic downturn.
