MADRID – Spain’s economy minister shrugged off short-term effects on the economy from the secessionist crisis in Catalonia, a political convulsion that has prompted an exodus of thousands of companies and a slump in retail sales.
Fourth quarter growth for Spain as a whole would be the same as the third quarter‘s, Luis de Guindos said after data showed a continued strong performance in July-September
Spain’s economy grew 0.8 percent between the second and third quarters for a year-on-year rate of 3.1 percent.
The Catalan impact was short-term, de Guindos said, sticking to the government’s end-of-year growth forecast of 3.1 percent from a year earlier.
“In the fourth quarter, without doubt, Catalonia saw an strong deceleration. October has not been a good month, but we see a certain normalisation in November,” de Guindos said on the sidelines of a conference in Madrid.
Catalonia, an industrial powerhouse, is worth around a fifth of Spain’s economy, with output similar to that of Chile, and handles a quarter of the country’s total exports.
It held an illegal vote on independence on Oct. 1, leading to a month-long standoff with the Madrid government which ended with Madrid stripping the region of its autonomy on Oct. 27 and calling a local election for Dec. 21.
Throughout October, almost 3,000 companies moved their legal headquarters out of Catalonia, hotel stays plummeted and the country’s retail sales fell for the first time in over three years due to the slump in the region.
Spain’s growth, however, was boosted by expanding domestic demand, investment growth and a positive export market.
De Guindos reiterated that, while the government had cut its 2018 growth forecast to 2.3 percent from a previous 2.8 percent due to the Catalan crisis, he hoped the situation would return to normal after the December election.
“I hope that, as we’ve seen, it will normalise and we’ll be able to return to growth rates, as well as in Catalonia as in Spain, of around 3 percent,” de Guindos said.