Spanish GDP growth has passed its peak

The Q3 GDP figure for Spain was released at the end of October, but without the details in terms of components. Growing by 0.8% qoq in Q3 (3.4% yoy), the Spanish economy remained one of the most dynamic in the euro area. Domestic demand, consumption in particular, most likely remained the main driver benefiting from lower oil prices, improved financial conditions, tax cuts and a labour market recovery. 

Though still strong, Spanish growth has passed its peak and is likely to decelerate further in Q4. For 2016, downside risks to growth exist given the expected pick-up in inflation (weighing on real disposable income) and risks that the political uncertainties put a drag on businesses' investment and hiring decisions.