From the US to Italy and Germany: when consumption drives GDP growth

Can a country that, like Italy, will not grow in 2019, give positive surprises to fashion? The answer is yes, based on the fine print of the International Monetary Fund (IMF) forecasts. In the Mediterranean country, with a variation of 0.0% of the Gross Domestic Product (GDP) expected for this year, the sales of the fashion sector could close the year on the rise, since the IMF forecasts a rise of 0.3 % in household consumption.

The reason is that, despite the poor economic performance of the country, other factors will curb the rise in Italian GDP in 2019. Fundamentally, public spending, which will suffer a 0.9% cut throughout this year.

Private consumption will also behave better than the economy as a whole in countries such as the United States or Canada. In the American market, GDP will grow by 2.4% in 2019; On the other hand, household consumption will increase by 2.5%. In Canada, the rise in spending will also exceed by 0.1 percentage point the rise in GDP, which will be 1.6%.

If these 0.1 differences may seem of little importance, this is not the case with markets such as the United Kingdom or Germany, where household consumption drives economic growth. In the United Kingdom, GDP will grow by 1.2% in 2019, according to the latest IMF forecasts, but private consumption will boost to 1.6%. In Germany the difference is even greater: private spending will rise by 1.4% despite the country's GDP (strongly conditioned by foreign demand) will grow only 0.5%.

In the United States or Canada, private consumption will grow 0.1 percentage point more than GDP

If these countries can give positive surprises to the brands they distribute in them, other advanced economies such as France, Japan and, above all, Spain, can generate the opposite effect. In the French market, for example, household consumption will rise 1.1%, 0.1 percentage point less than GDP, while in Japan private spending will increase by 0.6% while the economy expands 0.9%. 

In the case of Spain, one of the countries with the best performance in the eurozone, GDP will grow by 2.2% in 2019. However, this does not mean that consumption will evolve at the same rate: IMF forecasts place the rise at only 1.5%.

These last examples are the exception in the global scenario, where generally advanced economies have in the consumption of families a key driver of economic growth. The IMF does not detail these forecasts beyond the aforementioned markets but points out that in the rest of advanced economies, private consumption will grow 0.2 percentage point more than the GDP as a whole.