The Spanish economy contracted by 0.3% in the third quarter due to the negative contribution of domestic demand, measured by investment and consumption, although this was partly offset by the positive contribution of external demand, namely exports and imports.
Household consumption did improve slightly as people bought durable goods in the run-up to the VAT hike on September 1st. However, consumption is expected to fall back to lower levels due to the unemployment situation and general lack of income for spending.