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Catalan economy grows by 2.6% in 2018

Catalonia's annual accounts for 2018 and fourth-quarter accounts

Catalan economy grows by 2.6% in 2018

1.8% year-on-year increase in economic activity in Q4

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Catalonia's annual accounts for 2018 and fourth-quarter accounts

Catalan economy grows by 2.6% in 2018

1.8% year-on-year increase in economic activity in Q4

According to the Statistical Institute of Catalonia (Idescat), Catalonia’s gross domestic product reached €242.3 billion in 2018, which translates into an annual growth rate of 2.6%. This growth rate is lower than in the previous three years, but 0.1 percentage points higher than the rate for Spain (2.5%) and 0.7 percentage points above the EU-28 average (1.9%).
 
Domestic demand grew by 2.5%. In contrast, foreign demand slowed, with the growth rate for exports falling from 5.1% in 2017 to 2.0% in 2018.
 
From a supply-side perspective, the construction sector led economic growth in 2018, with a 4.7% year-on-year increase in activity. The most significant change recorded was in industry, where the growth rate declined from 4.8% in 2017 to 1.1% in 2018. In services, economic activity increased by 2.9%, 0.3 percentage points more than in 2017. Given the weight of services in the Catalan economy (€161.8 billion), this sector was the main contributor to overall growth. Finally, a drop of 0.4% was recorded in agricultural sectors.
 
As for the quarterly GDP path, year-on-year growth slowed from 3.3% in the first quarter to 1.8% in the fourth quarter. Catalan GDP increased by 0.4% from the third quarter to the fourth, one percentage point less than in the previous quarter.
 
 Catalonia’s annual accounts for 2018
In 2018, Catalonia’s annual GDP growth rate was 2.6%. Domestic demand grew by 2.5%, 0.4 percentage points less than in 2017. The most notable component is gross capital formation, which increased by 4.6% due to higher investment in capital goods (up 4.7%) and construction (up 4.2%). Household consumption grew by 2.0%, 0.4 percentage points less than in 2017. Consumption by public administrations increased by 1.9%, slightly less than the previous year (2.1%).
 
The annual growth rate for exports was 2.0%, compared to 5.1% in 2017. This slowing of export growth is a general tendency in the European Union and consistent with the trend in trade at the global level. Foreign consumption in Catalonia increased by 5.2%, but this was 1.2 percentage points less than in 2017. The rate of growth in imports slowed to 3.6%, with significant variations in the trend for specific components. Imports of goods and services increased by 3.1%, while consumption by residents living abroad rose markedly (14.1%).
 
From a supply-side perspective, a slowdown in industrial sectors (from 4.8% in 2017 to 1.1% in 2018) represent a significant change in the evolution of GDP with respect to previous years. This trend was significant and correlated with slowing export growth. The performance of different industrial sectors varied significantly. Metallurgy and manufacturing of metal products continued to perform well, whereas there were declines in electricity, gas, water and non-metal mineral products. Some of the most important sectors, such as food and the car industry, saw moderate increases in activity.
 
The construction sector led growth in 2018 (4.7%). This was the fourth consecutive year of growth above 4% in the sector, though the rate was down 1.1 percentage points from 2017.
 
Services performed particularly well, achieving 2.9% growth, 0.3 percentage points higher than the previous year. Growth rates in specific sectors were broadly similar to those for 2017. Once again, real state and professional activities are the components that increased most (3.8%). In trade, transport and hospitality, the growth rate was 2.1%, and consumption by public administrations grew 2.5%, a rate similar to the previous year.
 
Fourth-quarter accounts
Year-on-year GDP growth in the fourth quarter was 1.8%, 0.7 percentage points less than in the previous quarter. From a demand-side perspective, GDP grew thanks to sustained domestic demand (2.4%) and despite a negative balance of trade (-0.6%).
 
The annual growth rate for domestic demand was 2.4%, 0.2 percentage points higher than in the third quarter. Stronger domestic demand was generated by an increase in consumption by public administrations (2.3%) and gross fixed capital formation in capital goods (6.1%). In contrast, household consumption fell by 0.2 percentage points to 1.5%.
 
The growth rate for total exports was 0.4%, a slowdown from the previous quarter. In the most significant component – exports of goods and services – growth was negative (-1.1%). This represents a sharp contrast with recent years, in which Catalan exports performed strongly.  In contrast, consumption by foreigners in Catalonia increased by 9.5%. Total imports increased moderately (2.4%) with respect to the previous quarter.
 
The most significant development on the supply side was the first negative growth rate in industry (-2.4%) recorded in the last five years, which is consistent with the slowing growth rate for exports. The construction sector maintained an impressive growth rate in the fourth quarter of 2018 (5.2%). Growth in service sectors was quite stable over the entire year. Trade, transport and hospitality grew by 2.1% in the fourth quarter, 0.2 percentage points less than in the previous quarter. Other market-related service activities grew by as much as 3.9%, and sectors related to public administrations remained stable, with a growth rate of 2.2%.