1. The Spanish economy is slowing down, with the composite leading indicator decreasing by 0.22 points to 98.58 and below 100 points for 12 months. Spain recorded the third largest economic slowdown among OECD countries in August. 2. Tourism to Spain increased by 1.5% in arrivals but average spending grew only modestly by 1.7%, below last year's growth. Forecasts for Spanish GDP growth in 2019 were reduced to a range of 1.9-2.2%. 3. Industrial production in Spain grew 1.7% in August but this was below the 2015-2017 average, confirming weaker industry dynamics since 2018 due to slowing European and German industry and lower exports.

1. Source: Círculo de Empresarios based on Funcas & OCDE, 2019
Source: Círculo de Empresarios based on INE, 2019
1 Economy is in slowdown when the CLI series is below 100 points
and decreasing.
Source: Círculo de Empresarios based on INE, 2019
52.2
57.3 57.3 58.21,015
1,056
1,084
1,102
50
55
60
950
1000
1050
1100
1150
2016 2017 2018 2019
Tourist arrivals (right axis)
Average expenditure per tourist (left axis)
-8
-4
0
4
8
Industrial Production Index
Industrial Production Index (MA 12 months)
98
99
100
101
102
Feb-15
May-15
Aug-15
Nov-15
Feb-16
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
Aug-19
China Eurozone OECD
Spain US
2 2 1.9 1.9 2.2
2.3 2.4
2.2 2.1
0
1
2
3
Axesor Bank of
Spain
Funcas CaixaBank
Research
Government
of Spain
2019 Last forecast
Economic slowdown
In August, Spain recorded the third largest
economic slowdown among OECD
countries, after Ireland and Slovenia.
Specifically, the Composite Leading
Indicator (CLI) decreased by 0.22 points to
98.58 and has been below 100 points1
for 12
months now. In turn, the rate at which the
Spanish economy is slowing down has
doubled that of the Eurozone average (-0.1
points to stand at 98.96).
In this context, Funcas has reduced the
annual growth forecasts of the Spanish GDP
down to 1.9% in 2019 and 1.5% in 2020 (-0.3
and -0.5 pp, respectively), mainly due to the
lower dynamism of domestic demand and
the INE’s revision of the historical series of
GDP. Currently, the national growth
forecasts for this year are in the range
between 1.9% and 2.2% per year.
In this scenario, it is forecasted that the public
deficit at 2019 year-end will be around 2.5%, 0.5
pp higher than the objective sent to the
European Commission by the government in
power, which means that one more year has
beenlostintermsoffiscalconsolidation.
Tourism sector, Spain
Between January and August, the arrival of
international tourists to Spain increased by
1.5% year-on-year, reaching 58.2 million
visitors, compared with the stagnation of
the same period of 2018 (-0.02%). By
countries, the United Kingdom (21.7% of the
total), France (14%) and Germany (13.3%)
remain the main tourist sending countries.
As for tourism spending, it increased by
3.2% year-on-year, 0.6 pp more than in the
same period of the previous year, reaching
€64.1 billion (5.3% of GDP), although the
average spending per tourist experienced a
moderate growth of 1.7% year-on-year (€
1,102 per tourist), which is 0.9 pp lower than
that recorded between January and August
2018.
Industry in Spain
In August, for the fifth consecutive month,
the Industrial Production Index (IPI)
recorded a new year-on-year increase of
1.7%, the third largest of the year.
However, this increase is 1.2 pp below the
annual average registered between 2015 and
2017, which confirms the lower dynamism of
the sector since 2018 due to the weakening
of European industry, especially the German
industry, and the lower growth in the
exports of Spanish goods.
Economy…
at a glance October 2019
Composite Leading Indicator evolution, OECD
Points
Spanish tourism sector evolution
€ & million of tourists; January-August
GDP growth forecast Spain, 2019
%
Industrial Production Index evolution, Spain
YoY change (%)

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
Source: Círculo de Empresarios based on Sentix, 2019
Source: Círculo de Empresarios based on Bureau of Labor Statistics, 2019
Source: Círculo de Empresarios based on Bank of Korea, 2019
0
50
100
150
200
250
300
350
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Employment growth MA 12 months
-16.8
-40
-20
0
20
40
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
-4
-2
0
2
4
6
GDP Industrial production
Economic sentiment
The monetary stimulus announced by the
ECB and the Fed have failed to mitigate the
growing doubts about the future evolution
of the European economy.
In October, the Sentix index, which assesses
the economic sentiment of investors in the
Eurozone, waned by 5.7 points to -16.8
points, its record low since April 2013. The
main causes of the deterioration in business
confidence are the escalating trade tensions,
the slowdown of growth in the Eurozone,
especially in Germany, and dwindling
corporate profits.
In this context, the IMF warns that the
global economy is now in a synchronised
slowdown in nearly 90% of the countries,
estimating that the cost of the trade war
could mean a loss of around $700 billion by
2020 (0.8% of its GDP).
US labour market
In September, the US unemployment rate
decreased to 3.5%, reaching a new record
low since 1969. In spite of this, its labour
market continues to lose dynamism as its
economic growth forecasts worsen.
Specifically, the employed population
increased by 136,000 people, 19% less than in
August, and 23% below the average of the
last 12 months (176,700 jobs/month).
By sectors, on the one hand, the 2,000 jobs
that were slashed in manufacturing stand
out, compared with the average monthly
creation of 22,000 jobs in 2018. On the other
hand, the services sector increased by
109,000 workers, 33.1% less than in August.
South Korea
Since the beginning of 2019, South Korea has
shown signs of an economic slowdown
mainly due to the escalating trade tensions
with Japan, the global economic slowdown,
and the rising geopolitical risks. Specifically,
the grim outlook for its industrial and
foreign sectors:
• In August, its industrial production fell by
2.9% year-on-year, or a cumulative average
drop of 1.3% since January 2019, compared
to the average progress recorded of 1.4%
since 2015.
• In September, its exports of goods fell by
11.7% year-on-year, which is 11 consecutive
months of decline, compared to the
progress of a 34.9% increase recorded a
year ago.
In this scenario, the South Korean
government has announced a series of
measures to boost job creation and
investment in R&D. This expansive fiscal
policy will represent an increase in public
spending of 8% against the backdrop of a
40% debt-to-GDP ratio (75% for the OECD)
and where its central bank has reduced the
official interest rates to 1.5% in August
(-25 bp).
Employment monthly growth, US
Thousands of jobs
Sentix index Eurozone
Points
GDP growth and industrial production, South Korea
YoY change (%)