Spain Foreign Direct Investment (EUR bn)

Foreign Direct Investment in Spain

GDP recorded a stronger-than-expected quarter-on-quarter expansion in Q1. A strong Easter tourism season supported the external sector, while fixed investment rebounded, likely benefiting from the disbursement of EU Next Generation funds. Meanwhile, household spending continued to shrink at a notable pace, buffeted by increasing core inflation. Moving to the current quarter, the economy should be losing some steam. The manufacturing PMI fell into contractionary terrain in April, and in the same month the services PMI dipped—although it remained comfortably in expansionary terrain. Moreover, inflation rose in April, signaling sticky price pressures. That said, both consumer and economic sentiment strengthened. In politics, the ruling coalition performed poorly in local elections held on 28 May, which prompted President Sánchez to call early elections for 23 July.