Domestic demand underpins Spain Q2 GDP growth of 0.7%

• Spain's second quarter GDP growth came in at +0.7% quarter-on-quarter, matching the forecast of +0.7%.
• The previous quarter's growth was 0.6%.

According to the final estimate, Spain's economy expanded 0.7% in the April-June period, a slight acceleration from the 0.6% recorded in the first three months of the year.

Domestic demand continues to drive growth, adding 1.1 percentage points to the quarterly figure.

On the demand side, household spending rose 1.2% and public spending increased 0.5%, while gross fixed capital formation posted a change of 1.7%.

External demand continued to drag on growth, removing 0.5 percentage points as imports once again exceeded exports.

The data tracks the total value of goods and services produced within Spain. The quarterly figure provides a broad indicator of the pace of economic expansion or contraction.

Markets care because Spain has been outpacing many other euro-area economies, and these numbers offer a check on whether that relative strength persists.

Initial data indicated widespread growth across sectors. Industry grew 1.0% quarter-on-quarter, services 0.8%, construction 0.6% and agriculture 0.2%. Employment was also favourable, with full-time equivalent employment up 2.3% compared to a year earlier.

If the final reading had deviated substantially from the preliminary 0.7% q/q estimate, Spanish bonds and the euro might have seen a small reaction. But with the final figure nearly unchanged, it essentially confirms what markets already knew.

The relevance to markets is limited. While Spain's growth persistence is informative for assessing the wider euro-area economy, a final GDP figure that merely confirms the initial estimate is not expected to alter ECB policy expectations significantly or produce a lasting market response.