Catalonia turmoil sets Spain retail sales falling

MADRID: Spanish retail sales fell for the first time in over three years in October, with sales in Catalonia dropping sharply after an illegal independence vote on Oct. 1 pushed the country into its worst political crisis in more than four decades. The vote prompted a standoff with the central government, which then took control of the region. The deadlock left eight of the regional cabinet in jail awaiting trial after a declaration of independence Oct. 27 that the courts ruled illegal.

The crisis hurt many of Catalonia’s economic indices in October, with car sales, job creation and hotel-stays all underperforming the rest of the country. Almost 3,000 companies have moved their legal headquarters from the region since the vote. Spanish retail sales fell 0.1 percent in October from a year earlier on a calendar-adjusted basis, after increasing by a revised 1.6 percent in September, the National Statistics Institute (INE) said yesterday.

The September figure was revised from an original reading of a 2.1 percent increase. The unadjusted series fell 1.2 percent, INE said, with Catalonia decreasing the most out of all of Spain’s 17 regions, down 3.9 percent from a year earlier. The wealthy, industrialized region of Catalonia weighs heavily in the index alongside Madrid, which was flat on the year.

Catalonia’s fall, coupled with an especially mild October which hit sales of winter clothing and textiles across the country, were the main reasons for the month’s drop, according to one analyst with access to INE’s data but who preferred to remain anonymous.

The government has said that Spain’s economy would grow just 2.3 percent next year if political tensions continued after the Dec. 21 regional election, but that could rise to three percent if the problem dissipated. The OECD yesterday cut its economic forecast for Spain for 2018 by 0.1 percentage points to 2.3 percent and warned the situation with Catalonia could drag on domestic demand. —Reuters