1) Growth forecasts for Spain were lowered by international organizations due to deceleration of the global economy, with the European Commission, OECD, and IMF forecasting growth of 2.6% in 2018 and 2.2% in 2019. 2) Spain's current account balance surplus fell significantly in the first 9 months of 2018 compared to the same period in 2017, mainly due to a large drop in the balance of goods and services. 3) Spain's inflation rate dropped in November compared to the previous month, predominantly because of reductions in electricity and fuel prices.

1. 3.7
2.4
4.7
2
2.7
3.9
2.5
4.9
2.4
2.8
0
1
2
3
4
5
6
World Advanced Emerging Euro area Spain
Currency forecast (October) Previous forecast (April)
-90000
-70000
-50000
-30000
-10000
10000
30000
50000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Balance of primary and secondary income
Balance of goods and services
Current account balance
0.7
1.71.3
2
0
1
2
3
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Spain Euro area
Growth forecasts
In the current context of deceleration of the
global economy, the main international
organisations have lowered their growth
forecasts for Spain. The European
Commission and the OECD agree that the
Spanish economy will grow 2.6% in 2018
and 2.2% in 2019, below the IMF estimate
(2.7% and 2.2%, respectively). For its part,
the Government expects a growth of 2.6%
and 2.3%.
Spain’s current account balance
From January to September, the cumulative
surplus of the current account balance fell
by 73.6% in year-on-year terms to €2.93bn,
the lowest figure for that period since 2012.
This decline is mainly the result of a 30.4%
drop in the balance of goods & services,
with a 6% increase in imports year-on-year,
3.2pp above exports (2.8%).
Spain HICP
In November, inflation dropped by 0.6pp to
1.7% year-on-year, predominantly due to the
reduction in electricity and fuel prices. If
this figure is confirmed, Spain’s inflation
would be below the Euro area average (2%),
reversing the trend maintained for the last
six months.
Economic indicators for Spain
• In November, registered
unemployment fell by 6.37% year-
on-year, 221,414 fewer unemployed
people, totalling 3,252,867, its
lowest level since December 2008.
The number of affiliates increased
by 2.9% year-on-year to a total of
18,945,624 (+527,868 year-on-year).
• In November, consumer
confidence dipped by 6.6%, 0.9pp
less than in October. In contrast,
retail confidence rose by 10.7% (9.5%
in October).
• In October, retail sales grew by 3.3%,
after experiencing a 1.4% drop in
September, and 11.5% in department
stores (-4.5% in September).
Whereas, vehicle registration
decreased by 6.6%, softening the fall
from the 17% decrease recorded in
September.
Economy…
at a glance December 2018
Source: Círculo de Empresarios based on INE & Eurostat, 2018
HICP evolution, Spain and Euro area
% YoY change, base 2015
IMF growth forecast, 2018
% annual change
Source: Círculo de Empresarios based on IMF, 2018
Source: Círculo de Empresarios based on Bank of Spain, 2018
Spain’s current account balance
Cumulative Jan-Sep, in million of €

2. ‘Economy at a glance’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains information and opinion from
reliable sources. However, the Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This
document is merely informative. As a result, the Círculo de Empresarios is not responsible for any uses that may be made of the publication. The opinions
and estimates of the Department can be modified without prior warning.
www.circulodeempresarios.org
1.25
3.75
7.75
10.5
1.75
3.75
4.75
7.75
0
2
4
6
8
10
12
Impact since May 2016 Impact since November 2018
No-deal:DisorderlyBrexit
Brexit withtrade deal
45
50
55
60
65
70
75
80
85
90
Brent WTI
OPEC Meeting
(6th December)
12.1
8.1
7
8
9
10
11
12
13
Jun-03
Feb-04
Oct-04
Jun-05
Feb-06
Oct-06
Jun-07
Feb-08
Oct-08
Jun-09
Feb-10
Oct-10
Jun-11
Feb-12
Oct-12
Jun-13
Feb-14
Oct-14
Jun-15
Feb-16
Oct-16
Jun-17
Feb-18
Oct-18
Greece 18.9%
Spain 14.8%
Italy 10.6%
Luxembourg 5.0%
Netherlands 3.5%
Germany 3,3%
Euro area unemployment
In October, Euro area unemployment
remainedat8.1%,0.7pploweryear-on-year,its
lowest level since November 2008. By
countries, Greece and Spain remain the two
economies with the highest unemployment
rates (18.9% and 14.8% respectively), whereas
Germany and the Netherlands report levels
below 4%.
Impact of Brexit
Since the referendum in June 2016, the
uncertaintysurroundingtheexitconditionsof
the United Kingdom from the EU has led,
according to UBS, to a depreciation of the
pound of more than 10% and a loss of GDP
growth and investment of 2.1% and 4%,
respectively.
The Central Bank of England has estimated a
decrease in GDP of between 1.25% and 10.5%
from mid-2016 to 2021, depending on the final
exit scenario of the United Kingdom*.
China- US
On December 2, after the G20 summit in
Argentina,theUSandChina haveagreedfrom
January 1on a moratorium of 90 daysin which
they will not raise tariffs or expand the list of
products affected by the trade war.
Specifically, the US has pledged not to raise
tariffs from 10 to 25% on Chinese imports
valued at $200bn, and China has announced a
reduction in tariffs on US vehicles, which
currently are at around 40%.
Oil prices
After the Brent barrel surpassed $85 in early
October due to the sanctions on Iran and the
over-compliance of the OPEC agreement
quotas, the price of crude oil has fallen by 22%
inNovember,itsbiggestdropinamonthsince
2008, explained by the greater supply and the
precarious prospects for world trade growth.
Thedevelopmentsinoilpricehingetothelack
of agreement at the OPEC meeting in Vienna,
to the trade relations between the US and
China, to the production cut in the Alberta
region, and to the departure of Qatar from
OPEC in January 2019.
Negative impact on GDP of Brexit
Percentage points
Source: Círculo de Empresarios based on UBS, Bloomberg & BoE, 2018
Brent and West Texas Intermediate spot price
$
*7.75% if it is calculated from November 2018, accompanied by a fall
in housing prices of 30% and an unemployment rate that would in-
crease to 7.5%.
Source: Círculo de Empresarios based on Eurostat, 2018
Euro area unemployment rate
%
Source: Círculo de Empresarios based on EIA, 2018