News Economy and Treasury

The Basque economy advances towards 0.6%, consolidating a steady growth rate and achieving the best registered figures in the last two years

2010 November 15

- Gipuzkoa is the territory with the best quarter-on-quarter performance, whilst Alava maintains the best year-over-year evolution.

- The details published today by Eustat slightly improve upon the forecasts of the Basque Government, particularly with regards to the boost of private consumption, which has been higher than previsions suggested.

- The number of people in employment remains stable, the services sector shows positive year-over-year and quarter-on-quarter results, once again accounting for 647 thousand jobs.

- Industry is now the most dynamic sector and the positive contribution of the overseas sector is once again considerable. Exports grow at a year-over-year rate of 9.1%, whilst the growth rate for imports is 8%.

The Basque economy has consolidated a steady growth rate. In the third quarter, the quarter-on-quarter rate did not vary and the year-over-year rate rose by a tenth to 0.6%, coinciding with the highest figure over the course of the last two years, registered immediately prior to the recession.

According to the data for Economic Accounts, published today by the Basque Statistics Office (Eustat), the evolution of the Basque Country's Gross National Product, in year-over-year terms, has proved very similar to the evolution evidenced in the Eurozone and in the EU-27, but less than the quarter-on-quarter growth of 0.4%. Therefore, no significant changes have occurred with regards to the second quarter.

In terms of territories, Gipuzkoa has shown the best quarter-on-quarter performance, obtaining a positive result (0.2%) for the third consecutive quarter. Biscay has registered a level result, whilst Alava has fallen 0.3% in comparison with the previous quarter.
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In comparison with the same quarter last year, Alava remains the territory with the best evolution with 2.9%, followed by Biscay, 0.3%, and Gipuzkoa, which registered a year-over-year rate of 0.0%.

It bears mentioning that the data published today by Eustat is very close to the previsions of the Directorate for the Economy, wherein a year-over-year growth of 0.5% was estimated, a tenth below the actual figure.

The official data for the third quarter evidences slight improvement over the forecast of the Basque Government, particularly in terms of the greater boost in private consumption. If the promising growth in this area continues over the course of upcoming quarters, recovery may be slightly more solid than previsions suggest.

With regards to employment, the number of people in employment has remained stable in comparison with the previous quarter, wherein almost 6000 jobs were recovered according to the data on the economic accounts published by Eustat. In comparison with the same quarter of the previous year, the fall in employment figures has dropped to almost 0.2%, considerably lower that the year-over-year figure one year ago, when the figure was over 4%. Therefore, we are at the point of beginning to create jobs, as announced in both the Eustat's PRA [employment rate figures] and the INE's EPA [active population survey], which have registered job creation over the course of the last twelve months as 12,200 and 16,000 respectively.

Attention should be drawn to the fact that employment within the services sector has registered quarter-on-quarter and year-over-year positive results of 1.5% and 0.2% respectively. Employment within the services sector accounts for 647 thousand jobs, having recovered practically all jobs that were lost as a result of the economic crisis.
From the point of view of Offers, industry is the most dynamic sector, in keeping with the improvements registered in the Industrial Production Index. Moreover, Industry, for the second consecutive quarter, has registered a positive year-over-year rate of 1.4%, five tenths higher than the figure for the previous period. For its part, the primary sector has registered significant year-over-year (18%) and quarter-on-quarter (5%) growth.

The services sector has moderated its recovery rate and with an increase of 0.7% in year-over-year terms, boasts three consecutive quarters of growth. In the case of construction, the increase in the sale of housing has not proved sufficient to prevent an increase in the year-over-year fall of the sector, now amounting to -6.1%.

From the point of view of Demand, private consumption has registered better figures than forecasts suggested, with a growth of 1.2%, only two tenths lower that the figure registered in the second quarter in which it incorporated the pre-tax-raise purchasing envisioned by the economic indicators. For its part, Public Consumption has risen (0.3%) for the second consecutive quarter.

The positive contribution of the overseas sector has once again proved extremely significant, whilst proving smaller than the previous quarter. The increased fall of imports has enabled the improvement of the external balance. Exports grow at a year-over-year rate of 9.1%, whilst the growth rate for imports is 8%.

Finally, attention should be drawn to the fact that significant recovery has been registered in investment, which, despite remaining in negative rates (-2.9% year-over-year and -0.1% quarter-on-quarter) is three points higher in terms of the figure for the previous period. Within this aggregate, investment in machinery and equipment is the area that offers the best results, as shown by the positive results for the production and importation of resources for equipment and machinery. Contrastingly, investment in the construction sector is largely responsible for the fact that the gross formation of capital is the only area of Internal Demand that maintains negative rates.

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