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Segundo semestre 2014
Sevilla, 10 de diciembre de 2014
Situación Consumo
Consumption Outlook 2H14 / 10 December 2014
Page 2
The global economy is growing, but more slowly than anticipated. Europe faces major challenges
The recovery in Spain continues at the pace expected, despite the stagnation in Europe. Reforms are still needed
Private consumption retains its momentum thanks to better fundamentals, more lending, less uncertainty and the prolongation of the PIVE programme …
… but the margin for improvement is running out: households are still leveraged, the savings rate is at rock bottom and the stimuli are transitory
The momentum of spending on durables relies on their greater income elasticity and on the fact that most consumer items are complementary goods
E-commerce is still used relatively little in Spain. IT literacy, income level, internet banking use and corporate digitalisation are all key
1
2
3
4
5
6
Key takeaways
Consumption Outlook 2H14 / 10 December 2014
Page 3
Section 1
Global recovery, slow and with risks to the downside
Section 2
Spain is growing and creating employment in line with expectations
Section 3
The recovery of private consumption continues, but the scope for improvement is running out
Section 4
The momentum of spending on durables relies on their greater income-elasticity and on the fact that most consumer items are complementary goods
Section 5
E-commerce and consumer habits in Spanish households
Contents
Consumption Outlook 2H14 / 10 December 2014
Page 4
Both the financial and the activity indicators
are sending signals consistent with a
favourable growth scenario …
… despite the emergence of geopolitical risk
factors …
… which, for the moment, have not altered the
expectations for world growth
Section 1
Despite the emergence of geopolitical risk events …
BBVA Research financial tensions index Source: BBVA Research
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Dec-1
1
Ma
r-1
2
Jun-1
2
Sep
-12
Dec-1
2
Ma
r-1
3
Jun-1
3
Sep
-13
Dec-1
3
Ma
r-1
4
Jun-1
4
Sep
-14
Developed Emerging (rhs)
Consumption Outlook 2H14 / 10 December 2014
Page 5
Global industrial activity continued growing
until May at around 3.4% YoY, from 3.0% at
the end of 2013
World trade recovered from its intense and
widespread downward correction, suffered in
1Q14 (e.g. the US)
The most recent data point to a moderate
acceleration in recovery in the next few
months
Section 1
… the most likely scenario is one of growth
Global growth based on BBVA-GAIN (% QoQ) Source: BBVA Research
0.0
0.2
0.4
0.6
0.8
4Q
13
1Q
14
2Q
14
3Q
14
4Q
14
Forecasts
Consumption Outlook 2H14 / 10 December 2014
Page 6
Section 1
The global economy continues to grow, but less than
expected in some countries
Source: BBVA Research 2014
USA Spain
Eurozone
Mexico
Brazil
China
LatAm EAGLES
2.0%
2.5%
1.3%
0.8%
7.2%
4.9%
0.2%
0.9%
Global 3.2%
LatAm 7: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela
EAGLES: China, India, Indonesia, Russia, Brazil, Turkey and Mexico
Consumption Outlook 2H14 / 10 December 2014
Source: BBVA Research 2015
USA Spain
Eurozone
Mexico
Brazil
LatAm
2.5%
3.5%
2.0%
1.3%
1.3%
1.8%
Global 3.7%
LatAm 7: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela
EAGLES: China, India, Indonesia, Russia, Brazil, Turkey and Mexico
China 7.0%
EAGLES 5.2%
Page 7
Section 1
The global economy continues to grow, but less than
expected in some countries
Consumption Outlook 2H14 / 10 December 2014
Page 8
On a historical comparison, the rate of exit
from the recession looks sluggish
Deleveraging in the private sector is slow and
total debt (public + private) remains high
The adjustment of the balance between agents, still pending, could be an obstacle to recovery in
the medium term
Section 1
The recovery is moderate
Per capita income: comparison of different crises and their respective recoveries Source: BBVA Research
Consumption Outlook 2H14 / 10 December 2014
Page 9
Section 1
Global recovery, slow and with risks to the downside
Section 2
Spain is growing and creating employment in line with expectations
Section 3
The recovery of private consumption continues, but the scope for improvement is running out
Section 4
The momentum of spending on durables relies on their greater income-elasticity and on the fact that most consumer items are complementary goods
Section 5
E-commerce and consumer habits in Spanish households
Contents
Consumption Outlook 2H14 / 10 December 2014
Spain: real GDP growth and MICA-BBVA forecasts Source: BBVA Research
Page 10
Section 2
Spain is growing and creating employment in line with
expectations…
The Spanish economy has enjoyed five
consecutive quarters of growth (0.5% in 3Q14)
and four of job creation …
… thanks to the improvement in domestic
demand, especially private, and despite the
fall-back in net exports
4Q14 indicators suggest growth of at least
0.5%
1.3% in 2014; 2.0% in 2015
-1.0
-0.5
0.0
0.5
1.0
-1.0
-0.5
0.0
0.5
1.0
Jun-0
9S
ep
-09
Dec-0
9M
ar-
10
Jun-1
0S
ep
-10
Dec-1
0M
ar-
11
Jun-1
1S
ep
-11
Dec-1
1M
ar-
12
Jun-1
2S
ep
-12
Dec-1
2M
ar-
13
Jun-1
3S
ep
-13
Dec-1
3M
ar-
14
Jun-1
4S
ep
-14
Dec-1
4 (
f)
CI at 60% CI at 40% CI at 20% GDP (%QoQ)
Consumption Outlook 2H14 / 10 December 2014
Spain: Estimated effect on GDP of a 1%
reduction in EMU economic growth (1980-2013.pp) Source: BBVA Research
Page 11
Section 2
… despite the weakness in the recovery of the EMU
In the past, a 1% fall in GDP in the EMU has
passed through almost entirely to Spanish
GDP
The trade channel (exports) will be the main
transmitter, but there may be others
(investment, financial, etc.)
But on this occasion, the impact may be lower
AND ARA
ASTBAL
CAN
CANT
CAT CLM
CYL
EXT
GAL
MAD
MUR
NAV
PVA
RIO
VAL
ESP
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
0 20 40 60 80
Impact
on G
DP
(pp)
Share of regional exports to the Eurozone (% total exports)
Consumption Outlook 2H14 / 10 December 2014
Spanish exports and GDP of the EMU (1980-2013.
% growth YoY) Source: BBVA Research based on INE and Eurostat
Page 12
Section 2
Factors that will underpin growth A. Greater diversification and competitiveness of exports
Exports continue to grow (3.5% QoQ in 3Q14)
despite the apathy in the EMU …
… as they did in the past as well
Greater diversification, gains in
competitiveness and increased investment in
recent quarters will support exports -2
0
2
4
6
8
10
12
14
16
18
-2 -1 0 1 2 3 4 5
EMU GDP growth (% YoY)
Spain
's e
xport
gro
wth
(%
YoY
)
2012
2013
1993
Consumption Outlook 2H14 / 10 December 2014
Page 13
Spain: Estimated effect on GDP of a 10%
depreciation in the euro/dollar exchange rate (1980-2013. pp) Source: BBVA Research
Section 2
Factors that will underpin growth
B. Looser monetary policy: a depreciating euro
Another factor which will improve
competitiveness will be a more depreciated
euro
We forecast an exchange rate of around USDEUR 1.20 in 2015; 10% below the 2014
average …
… which will strengthen the increase in
exports and the substitution of imports
PVA GAL
CANT CAT
NAV
CLMMUR
ESP
RIO
CAN
VAL
ARAMADAND
CYL
BAL
AST
EXT
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0 20 40 60 80 100
Impact
on G
DP
(pp)
Trade openness 2013 (% of GDP)
Consumption Outlook 2H14 / 10 December 2014
Page 14
Section 2
Factors which will underpin growth
B. Looser monetary policy: lower rates
Spain: estimated impact on GDP of a 100bp fall in the banking credit spread as a result of the TLTRO (pp) Source: BBVA Research
The ECB’s actions are designed to reduce the cost of bank lending, dependent on an
increase in credit
In Spain, lower rates may contribute around 0.5pp to GDP growth by in 2015 …
… although there is considerable uncertainty here
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
2014 2015 2016 2017 2018 2019
Consumption Outlook 2H14 / 10 December 2014
Page 15
Section 2
Factors which will underpin growth C. The cyclical improvement means that less fiscal tightening is required
Spain: discretional fiscal measures (pp of GDP) Source: BBVA Research
Between 2011 and 2013, reducing the public
deficit from 9.2 to 6.3% of GDP required
measures of over 7% of GDP because of the
recession
In 2014 there has been an improvement in the cycle and more responsiveness to the
recovery on the part of expenditure and revenues
This will give the public administration
departments the scope to implement
expansionary policies and, even so, meet their
targets
2.1
5.4
2.1
0.0
-0.2
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2011 2012 2013 2014 (f) 2015(f)
Consumption Outlook 2H14 / 10 December 2014
Leading variables
.
Lagging variables
Page 16
Section 2
Factors which will underpin growth
D. Progress in the reduction of imbalances
Real interest rate
Real net financial wealth
Building permits
Prices
Residential investment
External demand
-3.3pp since 3Q12
+46.0% since 2Q12
+15.5% since 2Q13
Stabilised in 2Q14
Stabilised at the end of 2Q14
+72% since 1Q10
=
=
Consumption Outlook 2H14 / 10 December 2014
Page 17
Section 2
Forecast by regions
Growth forecasts by regions (%) Source: BBVA Research
We hold to our forecasts of heterogeneous
growth by region
Differing levels of exposure of regions to external demand …
… and the progress in the process of fiscal consolidation continue to be the key factors
accounting for growth differentials
After contracting 1.5% in 2013, the Andalusian
economy is returning to growth in 2014 and
will accelerate in 2015
AND
ARA
AST
BAL
CAN
CNT
CYLCLM
CAT
EXT
GAL
MAD
MUR
NAV
PVAS
RIO
VAL ESP
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2
GD
P g
row
th 2
015
GDP growth 2014
Consumption Outlook 2H14 / 10 December 2014
Page 18
Section 2
Bias to the upside: lower oil prices
Spain: estimated impact on GDP and the CPI of a 20% fall in oil prices (pp) Source: BBVA Research
Reduced transport costs would make exports
more competitive
Furthermore, as the price reduction is passed through to households, private consumption
could benefit
It will be critical to diagnose the nature of the
fall: if it is due to increased supply and is
permanent, the impact could be significant -2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2014 2015 2014 2015
GDP (%YoY) CPI (%YoY)
Supply shock Global demand shock
Consumption Outlook 2H14 / 10 December 2014
Page 19
Employment changes (Level of employment at the beginning of each crisis = 100 ) Source: BBVA Research based on Andrés and Doménech (2012)
GDP growth target: 2.5% to 2025
Section 2
The need to dig deeper with reforms
Urgent short-term challenge: reduce the unemployment rate
But the travails of the job market go deeper: collective bargaining, two-tier system and
employment policies
More employment, and more productive
80
85
90
95
100
105
Peak 2 4 6 8 10 12 14 16 18years
Em
plo
ym
ent leve
l at
the b
egin
nin
g o
f th
ecrisis
= 1
00
Spain , 2007-25
EU8, 2007-11USA, 2007-14
USA, 1929-40
Consumption Outlook 2H14 / 10 December 2014
Page 20
Section 1
Global recovery, slow and with risks to the downside
Section 2
Spain is growing and creating employment in line with expectations Section 3
The recovery of private consumption continues, but the scope for improvement is running out
Section 4
The momentum of spending on durables relies on their greater income-elasticity and on the fact that most consumer items are complementary goods
Section 5
E-commerce and consumer habits in Spanish households
Contents
Consumption Outlook 2H14 / 10 December 2014
Page 21
What accounts for the growth in consumption?
Spain: data and forecasts in real time of household consumption Source: BBVA Research based on INE
Disposable income: changing cycle in the job market and tax regime
Wealth: Rise in financial wealth
Consumer appetite: Less uncertainty
Debt capacity:
Households → increase in lending
Public sector → PIVE programme
Section 3
The recovery of private consumption continues
-6
-4
-2
0
2
4
-3
-2
-1
0
1
2
Ma
r-0
8
Dec-0
8
Sep
-09
Jun-1
0
Ma
r-1
1
Dec-1
1
Sep
-12
Jun-1
3
Ma
r-1
4
Dec-1
4(e
)
Consumption (% QoQ, lhs) Consumption (% YoY, rhs)
MICC-BBVA (% YoY, rhs)
Consumption Outlook 2H14 / 10 December 2014
Page 22
Spain: employment and wage income (3Q13 = 100) Source: BBVA Research based on INE, MEYSS and Ministry for the Economy
Section 3
The recovery in private consumption continues
1. Changing cycle in the job market and tax regime
The reform of the labour market has helped to accelerate job creation
Occupation levels have gone up since 4Q13 …
… and will continue to do so during 2015 (1.0% in 2014; 1.8% in 2015)
The tax reform will cut 2.2pp off effective average rates to 2016 → this will contribute to
raising disposable income
95
100
105
110
115
120
125
Ma
r-0
8
Dec-0
8
Sep
-09
Jun-1
0
Ma
r-1
1
Dec-1
1
Sep
-12
Jun-1
3
Ma
r-1
4
Dec-1
4(
e)
Indicator of real wage income
Social Security afilliation
LFS employment
3Q13 = 100
Consumption Outlook 2H14 / 10 December 2014
Page 23
Spain: real net financial wealth (Deflated with the consumption deflator, swda figures, %) Source: BBVA Research based on Bank of Spain
Section 3
The recovery in private consumption continues
2. Increase in net financial wealth
Reduction of financial tensions → revaluation of stock market prices and fall in lending costs
→ ↑ financial wealth
BBVA Research: ↑1% of real net financial wealth → ↑ aggregate private consumption by
0.2% in the next four quarters
Real net financial wealth : ↑46.0% since 2Q12 → ↑7.5pp of growth in consumption to 2Q15 -15
-10
-5
0
5
10
15
0
200
400
600
800
1,000
1,200
Ma
r-0
8Jun-0
8S
ep
-08
Dec-0
8M
ar-
09
Jun-0
9S
ep
-09
Dec-0
9M
ar-
10
Jun-1
0S
ep
-10
Dec-1
0M
ar-
11
Jun-1
1S
ep
-11
Dec-1
1M
ar-
12
Jun-1
2S
ep
-12
Dec-1
2M
ar-
13
Jun-1
3S
ep
-13
Dec-1
3M
ar-
14
Jun-1
4
Eur mm (lhs) % QoQ (rhs)
2Q12-2Q14: ∆46.0%
Consumption Outlook 2H14 / 10 December 2014
Page 24
Spain: household perception of the economic situation (swda data, quarterly averages, balance of replies) Source: BBVA Research based on CE
Section 3
The recovery in private consumption continues
3. Less uncertainty
Household perceptions of the Spanish economy’s prospects are back to where they
were in 2000
… and in terms of their own financial situation, at their highest level for the last ten years
The reduction in uncertainty is an incentive to consumption, to the detriment of saving
Permanent ↑ of 10 points in confidence, ↑1.2 points in consumption in the next three years
-6
-4
-2
0
2
4
6
-50
-40
-30
-20
-10
0
10
ma
r-0
5
sep-0
5
ma
r-0
6
sep-0
6
ma
r-0
7
sep-0
7
ma
r-0
8
sep-0
8
ma
r-0
9
sep-0
9
ma
r-1
0
sep-1
0
ma
r-1
1
sep-1
1
ma
r-1
2
sep-1
2
ma
r-1
3
sep-1
3
ma
r-1
4
sep-1
4
Expectations on the household's financial situation (12 months)
Expectations on the overall economic situation (12 months)
Household's consumption (% YoY, rhs)
+23,5 puntos
+44,0 puntos
Consumption Outlook 2H14 / 10 December 2014
Page 25
Spain: new consumer financing operations (% YoY of the three-month centred moving average Source: BBVA Research based on Bank of Spain
Section 3
The recovery in private consumption continues
4. More financing
As the BBVA BTS suggested, new consumer credit operations have grown during 2014 …
… and have done so at double-digit rates, boosted by the increase in medium- and long-
term lending …
… in a context of deleveraging of the outstanding balance and still-high rates
Consumer credit /GDP: Spain = EMU = 5.7%
-80
-60
-40
-20
0
20
40
60
80
Ja
n 1
1
Apr
11
Ju
l 11
Oct 1
1
Ja
n 1
2
Apr
12
Ju
l 12
Oct 1
2
Ja
n 1
3
Apr
13
Ju
l 13
Oct 1
3
Ja
n 1
4
Apr
14
Ju
l 14
Oct 1
4
Total < 1 year 1-5 years > 5 years
Consumption Outlook 2H14 / 10 December 2014
Page 26
Spain: effect of the PIVE on private consumption (pp) Source: BBVA Research
Section 3
The recovery in private consumption continues
5. Fiscal stimuli: PIVE
The PIVE has limited the negative repercussion which the rise in VAT in Sept
2012 had on household spending
Effect on private consumption around 1 percentage point since 4Q12
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
Over the quarterly growth rate Cumulative effect
PIVE comes into effect: Oct-12
Consumption Outlook 2H14 / 10 December 2014
Page 27
Spain: private consumption gap (difference between observed spending and that explained by the fundamentals, % of spending explained by fundamentals) Source: BBVA Research
Section 3
The recovery in private consumption continues,
but the scope for improvement is running out
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2008 2009 2010 2011 2012 2013 2014 (f) 2015 (f)
Although consumption will continue to grow in the short term …
… several factors will limit its momentum in
the medium-term:
1. Levels of household debt (74% GDP)
2. Savings rate at rock bottom (9% GDI)
3. The PIVE has to end at some point
Households have consumed more than can be justified by their fundamentals →
Correction likely if their expectations are not met
Consumption Outlook 2H14 / 10 December 2014
Page 28
Section 1
Global recovery, slow and with risks to the downside
Section 2
Spain is growing and creating employment in line with expectations
Section 3
The recovery of private consumption continues, but the scope for improvement is running out Section 4
The momentum of spending on durables relies on their greater income-elasticity and on the fact that most consumer items are complementary goods
Section 5
E-commerce and consumer habits in Spanish households
Contents
Consumption Outlook 2H14 / 10 December 2014
Page 29
Availability of consumer goods (1Q13 = 100) Source: BBVA Research using Ministry of Economy figures
Section 4
Durable goods, in the lead
During the crisis, consumption diminished by more than 10% in real terms, back to 2004
levels
But not all products suffered equally. Durable goods had the hardest time (↓2/3)
Since the beginning of 2013, durables have led the household spending recovery. Why?
Box 2
90
100
110
120
130
140
150
Ma
r-1
1
Ju
n-1
1
Se
p-1
1
De
c-1
1
Ma
r-1
2
Ju
n-1
2
Se
p-1
2
De
c-1
2
Ma
r-1
3
Ju
n-1
3
Se
p-1
3
De
c-1
3
Ma
r-1
4
Ju
n-1
4
Se
p-1
4
De
c-1
4 (
f)
Consumer goods Food
Durables Remaining non-durables
1Q13 = 100
Consumption Outlook 2H14 / 10 December 2014
Page 30
Estimated spending-elasticity of each group of products (%) Source: BBVA Research based on INE
Section 4
Durables, in the lead
The consumption of certain durables is growing more than households’ purchasing
power → luxury goods
Transport is more sensitive to changes in income. White and brown goods have become
necessities
The majority of products are complementary goods:
e.g. ↓ of vehicle prices not only increases demand for them, but also for household
appliances and brown goods, furniture and leisure
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Non-durableand housing
White andbrown
goods
Leisure andrest
Furniture Transport
Each group's spending elasticity (CI at 80%) Unit elasticity
Consumption Outlook 2H14 / 10 December 2014
Page 31
Spain: car registrations by channel (swda data, three-month moving average, Jan-13 = 100) Source: BBVA Research based on ANFAC and GANVAM
Section 4
Durables, in the lead Cars: still up, but less vigour
PIVE-6: more modest results Individuals: 0.7% average from July to Nov, compared to 3.0% between Feb and June
during PIVE-5
Professional channel: diverging trends ↑9% companies ; ↓7% rental firms in 2H14
Less relative demand for 2nd hand vehicles: The 2nd hand/new vehicle ratio fell to 1.9 in
Sept 14 (2.1 to Sept 13)
The relative price of cars is rising: ↑1.2% in 2H14
80
90
100
110
120
130
140
150
160
Jan-1
3
Fe
b-1
3
Ma
r-1
3
Apr-
13
Ma
y-13
Jun-1
3
Jul-1
3
Aug
-13
Sep
-13
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Fe
b-1
4
Ma
r-1
4
Apr-
14
Ma
y-14
Jun-1
4
Jul-1
4
Aug
-14
Sep
-14
Oct-
14
Nov-1
4
Total Individuals Firms Rental companies
PIVE-5 PIVE-6
Professional channel: diverging trends ↑9% companies ; ↓7% rental firms in 2H14
Less relative demand for second-hand vehicles. The second-hand/new vehicle ratio
fell to 1.9 in Sept 14 (2.1 to Sept 13)
The relative price of cars is rising: ↑1.2% in 2H14
Consumption Outlook 2H14 / 10 December 2014
Page 32
Spain: forecast of vehicle registrations Source: BBVA Research
Section 4
Durables, in the lead Cars: the extension of the PIVE heralds more demand
2014: 860,000 units (around 19% more than in 2013)
2015: will depend on how long the PIVE is extended
↑6% if current conditions are retained for the whole year (~910,000)
The improvement in determinants (per capita income, unemployment, relative prices and
interest rates) will help -40
-30
-20
-10
0
10
20
0
200
400
600
800
1000
1200
2008 2009 2010 2011 2012 2013 2014 2015 L/P
(% Y
oY
)
'000 o
f cars
Data ForecastData % YoY (rhs) Forecast % YoY (rhs)
Consumption Outlook 2H14 / 10 December 2014
Page 33
Spain: registrations of motorcycles and estimated fleet (swda figures, 1Q13 = 100) Source: BBVA Research based on Bank of Spain and Anesdor
Section 4
Durables, in the lead Motorcycles: with a tail wind
An exceptional second half (↑30%) …
… accounts for the rise in motorcycle registrations in 2014 after six years of falls:
115,000 units (~20%)
Causes: better expectations, increase in lending and ageing fleet
2015: 140,000 registrations
0
50
100
150
200
250
300
Ma
r-0
8
Dec-0
8
Sep
-09
Jun-1
0
Ma
r-1
1
Dec-1
1
Sep
-12
Jun-1
3
Ma
r-1
4
Dec-1
4 (
f)
Registrations Estimated fleet
Plan Moto-E
Consumption Outlook 2H14 / 10 December 2014
Page 34
Spain: turnover in the furniture sector and housing investment (swda figures. 4Q13 = 100) Source: BBVA Research based on INE
Section 4
Durables, in the lead Furniture: tracking the awakening in the real estate sector
Turnover has risen for three quarters in a row (5.3% since 4Q13)
The first increase in housing investment since 2H07 boosted activity in the furniture sector
BBVA Research estimates: ↑1% in nominal housing investment →
↑0.7% in aggregate turnover 75
100
125
150
175
200
225
250
Ma
r-0
8
Dec-0
8
Sep
-09
Jun-1
0
Ma
r-1
1
Dec-1
1
Sep
-12
Jun-1
3
Ma
r-1
4
Dec-1
4 (
f)
Furniture Housing investment
4Q13 = 100
Consumption Outlook 2H14 / 10 December 2014
Page 35
Spain: household appliance sales by household (% growth YoY of number of units) Source: BBVA Research based on ANFEL
Section 4
Durables, in the lead White goods: the recovery digs in
2014 will be the first positive year since 2006 (↓40% in turnover to 2013)
Sales Jan-Nov 2014: 11.9% YoY (-5.6% in 2013)
Prices trending downwards → more modest increase in turnover (7.5%)
All the household appliance categories showed positive YoY growth, most of them in double
digits
-40
-20
0
20
40
60Refrigerators
Freezers
Washing Machines
Driers
Dishwashers
Cookers
Ovens
Worktops
Extractor hoods
Total
2013 Jan-Oct 2013 Jan-Oct 2014
Consumption Outlook 2H14 / 10 December 2014
Page 36
Spain: household penetration rate of brown goods (% of households) Source: BBVA Research based on INE
Section 4
Durables, in the lead Brown goods: more ICT, fewer consumer electronics
While demand for ICT equipment returned to growth in 3Q14 …
… there was less call for consumer electronics after the 1H14 uptick in sales driven by the
football World Cup
The fall in relative prices is contributing to raising the presence of ICT in households, but
not so with consumer electronics
0 20 40 60 80 100
E-book reader (*)
Video
MP3 or MP4
Sound system
DVD
Computer (inc. tablets)
Radio
Landline telephone
Mobile telephone
Television
2014 2013 2008
Consumption Outlook 2H14 / 10 December 2014
Page 37
Section 1
Global recovery, slow and with risks to the downside
Section 2
Spain is growing and creating employment in line with expectations
Section 3
The recovery of private consumption continues, but the scope for improvement is running out
Section 4
The momentum of spending on durables relies on their greater income-elasticity and on the fact that most consumer items are complementary goods Section 5
E-commerce and consumer habits in Spanish households
Contents
Consumption Outlook 2H14 / 10 December 2014
Page 38
Spain vs EU15: access to internet and e-commerce (households with internet access and on-line buyers in the last three months, %) Source: BBVA Research based on Eurostat
Section 5
E-commerce and consumption habits
ICT usage and widespread access to internet by households has helped e-commerce to
make progress in Spain (×5 since 2004; ×2 since 2008 )
But there is a lot of scope for improvement: only 1 in 4 people has recently made an
internet purchase in Spain, compared to 1 in every 2 in the EU15
What makes people buy over the internet? Why is e-commerce penetration still so low?
Box 1
0
10
20
30
40
50
60
70
80
90
2004 2008 2009 2010 2011 2012 2013
Spain: Internet access EU15: Internet access
Spain: Internet purchases EU15: internet purchases
Consumption Outlook 2H14 / 10 December 2014
Page 39
Determinants of the likelihood of buying on internet. Selected variables (%) (Reference: Woman, primary education, not employed, medium-low income band, household with five or more members) Source: BBVA Research Limited incidence of e-commerce :
• Individual characteristics: low income, inadequate ICT training, more people in the household…
• Modest economies of scale
• Technological failings and lower internet banking use
Reluctance of Spanish companies to exploit the possibilities of e-commerce. ←
Consumption Outlook 2H13
Reticence in households to buying on-line: 1 in 3 computer users says they have low or nil
trust of internet
Section 5
E-commerce and consumption habits
0 5 10 15 20 25 30 35
Internet banking
Internet at home
Assiduity of internt use
4-person household
3-person household
2-person household
One-person household
High income band
Medium-high income band
Employee
Secondary education
Tertiary education
Male
Population ≥500.000
Consumption Outlook 2H14 / 10 December 2014
Page 40
The global economy is growing, but more slowly than anticipated. Europe faces major challenges
The recovery in Spain continues at the pace expected, despite the stagnation in Europe. Reforms are still needed
Private consumption retains its momentum thanks to better fundamentals, more lending, less uncertainty and the prolongation of the PIVE programme …
… but the margin for improvement is running out: households are still leveraged, the savings rate is at rock bottom and the stimuli are transitory
The momentum of spending on durables relies on their greater income elasticity and on the fact that most consumer items are complementary goods
E-commerce is still used relatively little in Spain. IT literacy, income level, internet banking use and corporate digitisation are all key
1
2
3
4
5
6
Key takeaways
Segundo semestre 2014
Sevilla, 10 de diciembre de 2014
Situación Consumo
Consumption Outlook 2H14 / 10 December 2014
Spain and Europe: macroeconomic forecasts Source: BBVA Research based on INE and Eurostat
Appendix
Macroeconomic table
Spain EMU Spain EMU Spain EMU
Households final consumption expenditure -2.3 -0.6 2.1 0.7 1.8 1.3
General government final consumption exp. -2.9 0.2 1.0 0.9 0.9 0.4
Gross fixed capital formation (G.F.C.F.) -3.8 -2.4 0.6 0.6 4.3 1.8
Changes in inventories (*) 0.0 -0.1 0.0 0.1 0.0 0.0
Domestic Demand (*) -2.7 -0.8 1.6 0.8 2.0 1.1
Exports 4.3 2.1 3.7 3.7 5.3 5.1
Imports -0.5 1.2 4.8 4.1 5.5 5.2
External Demand (*) 1.4 0.4 -0.3 0.0 0.1 0.2
GDP mp -1.2 -0.4 1.3 0.8 2.0 1.3
Pro-memoria
Total employment (LFS) -2.8 -0.8 1.0 0.5 1.8 0.6
Unemployment rate (% Active pop.) 26.1 11.9 24.4 11.6 23.1 11.4
Current account balance (% GDP) 1.4 2.3 1.2 2.2 2.1 2.1
Public debt (% GDP) (**) 92.1 90.9 98.2 94.5 99.8 94.4
Public deficit (% GDP) -6.3 -2.9 -5.5 -2.8 -4.2 -2.6
CPI (average) 1.4 1.4 0.0 0.5 1.0 1.0
CPI (end of period) 0.3 0.8 0.3 0.6 1.2 1.1(*) Contribution to GDP Growth
(**) Excluding aid to the banking sector in Spain
(f): forecast
2015 (f)2013 2014 (f)(% YoY)