The trade deficit widened sharply in August to €3.9 billion from €1.6 billion in July. This is the most significant deficit in Spain since September 2019. However, the trade balance remains positive over the first eight months of the year, with an export boom of $201.6 billion, compared to just $193.5 billion in 2019, the last reference year before the covid crisis. Since January 1, the imports have returned to a level similar to the recorded in 2019. As a result, the trade deficit in the first eight months of the year is half the size of the same period in 2019, $10.9 billion compared to $20.6 billion.
The construction sector continues to go through a difficult period with a further decline in production in August (-1.5%). Construction sector activity has been in the red in Spain since the 4th quarter of 2020. And in light of the figures for the last few months, production will again be down in the third quarter of this year. The setbacks of the Spanish construction are not new. Activity in the sector has fallen by 20% since 2015, while at the same time, it has increased by 10% in the European Union.
On the public finance side, the latest statistics confirm the sharp deterioration of the situation because of the crisis. Last year, the budget deficit represented 11% of GDP, which is a European record. The debt ratio rose to 120% of GDP from 95.5% in 2019. Spain’s public finances have deteriorated considerably more than the European average.
For the euro area as a whole, in 2020, the government deficit amounted to 7.2% of GDP, while the debt climbed to 97.3% against 83.6% in 2019. And Spain continues to record higher government deficits than the European average this year. After the first quarter’s 8.5% GDP, the Spanish deficit stood at 7.3% in the second quarter, against 7.1% and 6.9% in the Eurozone.
Finally, September inflation was confirmed at 4% by the latest figures published by Eurostat, the European Agency for Statistics. This is the highest level since September 2008. Spanish inflation is also significantly higher than that of the Eurozone as a whole (3.4%).