Spain GDP Growth Softens; Inflation Eases

(RTTNews) - Spain's economic growth slowed marginally in the first quarter and inflation weakened in April on lower gas and electricity prices, official data showed on Tuesday. Gross domestic product expanded 0.6 percent in the first quarter, which was slightly slower than the revised 0.7 percent growth posted a quarter ago, the preliminary data from the statistical office INE showed.

The economy was expected to grow 0.7 percent after fourth quarter's initially estimated expansion of 0.8 percent.

On a yearly basis, economic growth softened to 2.8 percent from 3.3 percent a quarter ago.

Domestic demand contributed 0.4 points to quarterly growth and external demand contributed 0.2 points.

On the expenditure-side, household spending climbed 0.4 percent and government consumption moved up 0.2 percent. At the same time, gross capital formation posted a growth of 0.6 percent.

Exports of goods and services advanced 1.0 percent and imports climbed 0.7 percent.

The production-side breakdown revealed that all sectors expanded from the preceding period. Industry expanded the most, by 1.1 percent quarterly, while services and construction grew only 0.3 percent and 0.4 percent, respectively. The rapid economic growth is likely to continue for some time yet, despite trade uncertainty, Capital Economics economist Adrian Prettejohn said.

While consumption and government spending were weaker than expected in the first quarter, they will pick up in the coming quarters given high household income growth and government spending commitments, the economist noted.

Consumer price inflation slowed less than expected to 2.2 percent in April from 2.3 percent in March, the flash estimate from the statistical office INE revealed. The rate was forecast to slow to 2.0 percent.

At the same time, EU harmonized inflation held steady at 2.2 percent in April.

Meanwhile, underlying inflation that excludes prices of unprocessed food and energy rose to 2.4 percent from 2.0 percent.

On a monthly basis, the consumer price index and the harmonized index of consumer prices rose 0.6 percent, each. In March, the CPI edged up 0.1 percent and the HICP grew 0.7 percent.