BBVA Research raises growth forecast for Valencia Community to 1% for 2023

The latest report released to the public by the bank’s research service, Spanish GDP for 2022 will rise to 4.6%, mainly due to a more dynamic consumption behavior, investment and export of goods in communities such as Madrid, Catalonia, Castilla-La Mancha and Murcia, as well as some autonomous communities in northern Spain such as Navarra, Castilla y León and Galicia. Regarding 2023, the growth forecast for 2023 has been revised upwards by 2%, with which Spain’s GDP will grow by 1.2% thanks to the good work of the autonomous communities most closely linked to construction and exports. Basque Country, Navarra and Galicia lead upward revisions to 2023. In 2024, activity will increase by 3.4%, driven by the normalization of operations in Europe and the higher application rate of NGEU funds.

after being too strong tourism recovery The report highlights that last year Spanish destinations are already close to pre-crisis occupancy levels. recovery with a differential increase in tourism spending Balearic Islands and Canary Islandsleads to an upward revision of these two communities by 1 and 1.1 points, respectively. Although the data for the second half already shows less momentum and looking ahead, tourism is expected to lose momentum due to low disposable income in origin markets.

Consumption is starting to slow down due to inflation, uncertainty and low job creation. However Card expenditures registered at BBVA POS It shows that household expenditures continued to increase in real terms in all communities in the fourth quarter of this year. In fact, especially in the Balearic Islands and Navarre Foral Society there is even some acceleration compared to the third quarter. Asturias completes the podium of communities with spending growth exceeding 10% on average in October and November, but exhibits less dynamic behavior in other quarters. The least activity in purchasing is seen in northern communities. Inside Castilla y Leon and Cantabriagrowth 1%, Galicia 2% and within Catalonia, La Rioja and Aragon3% per annum.

Membership

By Social Security linkThe resilience of employment behavior is surprising as it remains positive after the slowdown in the third quarter of this year. Canary Islands and the Community of Madrid stand out above the rest, along with Cantabria, Galicia and Extremadura, which experienced significant declines in the previous quarter. In contrast, Navarra, La Rioja, Castilla-La Mancha and the Balearic Islands are the only CCAAs where employment data indicates worsening in the last quarter of the year.

Regarding regional differences, the Canary Islands (10.3%) and the Balearic Islands (9.9%) together with the Community of Madrid (5.1%) and Catalonia (4.7%), To grow above the national average (4.6%) in 2022. On the opposite side are Castilla y León and Asturias with growth of 3.2%, and Aragón and Cantabria with a growth rate of 3.3% are lagging behind Spain.

Thanks to the recovery of the European economy from the second quarter of the year and increasing certainty about the cost of energy, Acceleration of industrial activity and exports of goods in the second half of 2023It could cause GDP growth to remain at 1.2% in 2023 despite a poor start to the year expected. Basque Country, Navarra and Galicia leading the upward revisions (+0.5 percentage points), followed by the rest of the north, Catalonia and the Valencian Community. All of this has been facilitated by the gradual recovery of European demand, the resolution of bottlenecks and the reduction of uncertainty.

The lower expected contribution of private consumption and foreign tourism to national GDP in 2023 justifies downward revisions in the islands, Community of Madrid, Region of Murcia, Castilla-La Mancha and Andalusia.

BBVA Research confident growth to reach 3.4% by 2024. In this case, the momentum of the Next Generation EU Funds (NGEU), greater certainty, lower inflation and an increase in household income will support more dynamism in the economy. This momentum will be greater in the communities with the greatest weight in the industry, supported by the elimination of bottlenecks in the production of goods. On the contrary, tourist communities will experience less growth once the influx normalizes.

The risks of the Spanish economy that need to be taken into account

BBVA Research drew attention to some risks in the Spanish economy that should be taken into account in the coming years. The first is the probability tourism does not Given the loss of competitiveness recorded, adjustment in demand due to decline in household income, and possible changes in consumption patterns, doubts about its progress in the past two years and in the coming quarters. While Spain, along with Portugal, was the country with the highest increase in accommodation prices in 2022, the main buyer areas of foreign tourism were the countries that increased prices the most. All the advantages of the 2022 winter season.

Another risk is inflation.may remain high for the next few months. The increasing prevalence of price hikes, previously predominantly associated with energy, indicates that companies are trying to regain some of their lost profitability. Wages are rising, but before the pre-pandemic purchasing power is restored and therefore the consolidation of the income agreement will be key to the future development of inflation.

While the implementation of NGEU funds appears to be gaining momentum, it will still take time for its impact to reach families and companies. Despite this, an acceleration in bidding for construction works is already being recorded in communities such as Castilla-La Mancha, the Community of Valencia, Andalusia and Catalonia. As the implementation of funds gains momentum, the communities most dependent on public spending and those who provide the goods for investment may benefit more.