Productivity growth has slowed in the last two quarters.
The specter of low productivity haunts the Spanish economy after two consecutive quarters of slowdown. According to the latest Ivie-BBVA Foundation report, productivity growth in the first quarter of the year was 0.9% year-on-year, 38% lower than in 2024 as a whole, but similar to that of 2023.
"It's not good news" that productivity is counting less for growth, warns Ivie-BBVA in its half-yearly report on the Productivity Tracker within the Observatory created to analyze the evolution of this indicator. Juan Fernández de Guevara, a professor at the University of Valencia and researcher at Ivie, is one of the heads of the Productivity Observatory: "It's slowing down, but the important thing is that productivity continues to grow, unlike in the past." As can be seen in the graph, productivity fell in the early years of the century and has recovered in recent years, but is only 3.3% above its 2000 level.
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Improving productivity means producing more with the same workers and the same machines. That's why productivity gains are so important, explains Fernández de Guevara, although he points to other positive data. For example, statistics show that employment grew strongly for yet another quarter. To analyze the evolution of employment in productivity, hours worked are used as a reference. These increased by 2% between January and March on an annual basis. Fernández de Guevara also highlighted the increase in investment, which registered a 4% increase.
If people work longer hours and there is more capital (machinery and other assets needed for production), the economy will grow more. That's why the Ivie-BBVA laments that "investment and robust job growth are driving GDP growth, while improvements in productive efficiency had a lesser effect." Therefore, what drove GDP (gross domestic product) in the first half of the fiscal year was different from last year. The economy, measured in terms of GDP, grew by 3.1%. 44.3% came from job creation. Another 26.3% came from capital. The rest of the growth was thanks to productivity, which contributed the remaining 29.4% of the GDP increase. Despite continuing to contribute positively to the improvement in GDP, its contribution is lower than the average for 2024 (41.7%).
Working hours increase by 2% and investment soars by 4% in the periodDespite the productivity gains in the first three months of the year, five of the eleven business sectors saw declines: energy; construction; information and communications; financial and insurance activities; and real estate.
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