MADRID (Reuters) -Spain's economy expanded less than expected in the third quarter, preliminary data showed on Friday, raising further concerns about the recovery path after a weak second quarter and amid the spectre of rising inflation.
Flash data from the National Statistics Institute (INE) showed gross domestic product expanded by 2% in the third quarter from the second and by 2.7% from the same period in 2020. Economists polled by Reuters expected a 2.7% quarter-on-quarter expansion and a 3.5% annual growth.
Crucially, private spending decreased 0.5% quarter on quarter as Spaniards held on to savings built up over a year of subdued consumption.
Despite strong growth from the hospitality and retail sectors over summer, key industries like real-estate and financial services slowed down.
Angel Talavera, head of European Economics at the Oxford Economics consultancy, said on Twitter (NYSE:TWTR) that the growth was "quite disappointing" and that he expected future revisions.
At the start of the quarter Spain was still grappling with its most recent wave of COVID-19 infections, which it has since reined in through widespread vaccination.
National statistics are still distorted by the effects of a strict lockdown imposed in the second and third quarters of 2020.
In September the INE slashed its final second-quarter growth figure to 1.1%, less than half its initial estimate, prompting the central bank to say it would lower its forecasts for the full 2021 significantly.
Rising inflation, which reached a nearly 30-year high in October on soaring energy costs, has cast further doubt on the speed and scale of Spain's recovery from a historic 10.8% slump last year.
However, the government has stuck to its bullish predictions for a return to pre-pandemic GDP levels by the end of the year and expects 6.5% annual growth in 2021, followed by an even higher 7% in 2022.
The Economy Ministry said the latest data put Spain in a good position to face up to a fourth quarter likely to be marked by rising energy prices and supply bottlenecks.
Buoyant third-quarter jobs data released on Thursday, which saw Spain surpass 20 million people employed for the first time since 2008, provided some basis for optimism.