Madrid (AFP)

In Madrid, the car dealer Roberto Garrido sees its sales melt since January. Spain, which votes Sunday, is facing a sharp slowdown in its economy, undermined by global uncertainties and political instability that prevents any substantive reform.

His only sales of Renault vehicles have fallen by 30% year-on-year, he says, and all non-urgent investments in his dealership have been frozen.

With the return to growth in 2013, the sector had benefited from "a catch-up effect compared to the crisis years," Garrido told AFP in the district of Fuente del Berro, popular with the middle classes.

But this effect is disappearing and the lack of a stable government in a country that will vote for the fourth time in four years, and therefore clear rules for the automotive sector and allowable emissions, disorient buyers, he said.

"Politicians say everything and its opposite on diesel, gasoline, pollution or pedestrian streets in big cities ... Result, people do not know what to do, what car to buy and they postpone their purchase", regrets the entrepreneur who hopes, without believing it, a little more clarity after the legislative elections.

Overall, in Spain, car sales fell 6% in the first ten months of the year, and more than 12% for private purchases alone, according to the ANFAC manufacturers' association.

On Thursday, the European Commission sharply downgraded its GDP growth forecast for 2019 to 1.9% from 2.3% initially forecast.

Recently, the government and the Bank of Spain also adjusted their forecasts, to 2.1% and 2% respectively, while between 2015 and 2017, Spain was prancing around 3% annual growth.

For economists surveyed by AFP, the main explanation lies in the global context: uncertainties related to various trade wars and slowdown among major partners, EU and Germany in the lead.

"There is a significant deterioration in household consumption and a significant slowdown in business investment," says Rafael Domenech, an analyst for BBVA Research.

Merchandise exports are growing at a slower pace than in 2018 (+ 1.7% in the first half of 2019 compared with + 2.9%) and should be hurt by the US decision to impose tariffs on many Spanish agricultural products (oil olive, wine, cheese ...) in retaliation for the Boeing-Airbus conflict.

- Unemployment still very high -

Consumption rebounded in the third quarter but experts do not expect a sustainable upturn because, in parallel, the unemployment rate is declining more slowly than in recent years.

At the end of September, it stagnated at nearly 14%. And in October, the country recorded the worst increase in the number of jobseekers since 2012.

In the run-up to the elections, the outgoing Socialist Prime Minister, Pedro Sanchez, nevertheless displays his optimism.

"We have a solid foundation to deal with this slowdown," he said on Wednesday, noting that Spanish growth is "above the eurozone average" (+ 0.4% vs. + 0.2% in the second quarter) and the country continues to "create jobs".

But Sunday's poll will probably not end the instability as Mr. Sanchez, favorite polls, does not seem able to form a majority to govern.

This political paralysis blocks the adoption of the necessary reforms to enable Spain to face a future crisis.

"Since 2012-2013, we have not made any structural reform, the sources of growth are running out," said Toni Roldan, economic policy specialist at the Esade business school and former member of the leadership of the liberal party Ciudadanos.

"Of course, there has been a strong catch-up growth but there has been no strong educational reform or labor market reform", which remains marked by great precariousness with the highest rate of temporary contracts in Europe , he explains.

In the shorter term, the employers warned against the economic impact on Catalonia of a continuation of unrest in this rich region, shaken mid-October by violent independence demonstrations.

© 2019 AFP