Spanish Economy Stays Strong But Blackout Clouds Outlook

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(Bloomberg) — Spain’s consumer-led economy posted another strong quarter of expansion, but a massive blackout this week is likely to take a toll on growth.

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Growth domestic product rose 0.6% from the previous three months between January and March, data Tuesday showed. That’s just short of the fourth quarter’s 0.7% advance — the same increase that analysts surveyed by Bloomberg had anticipated.

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Elsewhere, consumer-price gains unexpectedly held steady at 2.2% from a year ago in April. That’s more than the median estimate and a little above the European Central Bank’s 2% target.

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A measure of underlying inflation that excludes energy and some food costs also wrong-footed economists by quickening to 2.5% from 2%. 

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Spain is the standout performer among the euro area’s biggest countries and saw its 2025 outlook upgraded last week by the International Monetary Fund — unlike any other major economy around the world except for Russia. The lender sees GDP rising 2.5% this year.

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Monday’s power outage — which also affected Portugal — will probably weigh on that projection, however. Bloomberg Economics warned of a potential hit “approaching 0.5% of quarterly GDP.” It added that some of that would probably be made up as energy supplies are restored. Early Tuesday in Madrid, power supplies were back to nearly 100% capacity and urban trains were slowly returning to regular service.

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Spain is benefiting from a strong services sector, which goes beyond the post-pandemic tourism boost. Still, its central bank recently raised the question of whether the country can keep growing significantly faster than its two main trading partners, France and Germany.

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The euro zone’s fourth-biggest economy is the first to report first-quarter GDP, with data from the bloc’s other major members scheduled for Wednesday. France will likely show expansion of just 0.1%, while Germany, Italy and the wider euro area are expected to have grown by 0.2%.

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Inflation in the region, meanwhile, is decelerating. Figures due Friday are expected to show a reading of 2.1% for the 20-nation bloc.

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In a sign of the economy’s health, unemployment is hovering around its lowest level in more than 15 years although on Monday data from the first quarter showed the highest rise for that period since 2013. The unemployment rate is at 11.4% — down from 12.3% a year ago.