The report highlights: The Group slowed its growth in the last quarter of 2022, leaving the annual rate at 2.1%, below the national average and at levels very similar to or higher than European Union levels. According to the research, issues such as high energy and raw material costs, inflation and increase in interest rates accelerated the slowdown in economic activity.
All components of domestic demand, especially household consumption, suffered. On the contrary, exports continued to grow and reached record figures of close to 40,000 million euros in the Community as a whole. In the primary sector, adverse weather conditions and significant cost increases caused production and sales to decline in most crops, while slowdowns were recorded in both industrial and construction processes. The services sector, which had shown good overall growth up to the third quarter, only bore the weight of the deterioration in transport and warehousing activities.
The Consumer Price Index (CPI), which has been following a moderate course since September, rose to 7.7% in January, three-tenths above the national level.
Looking to the near future, the report emphasizes that tightening monetary policies and still high inflation rates will put pressure on consumption and investment decisions of private economic agents globally. A slowdown of up to 0.90% is expected in the eurozone for 2023. Given this panorama, levels of uncertainty remain high for the Valencia Community economy. He adds, however, that the following can be deduced from the analysis of recent data and the future prospects of industry business organizations: In 2023, while the regional economy will continue its horizontal course in the first quarter, it will show signs of increasing recovery starting from the second quarter..
CEV emphasizes that: Gradual softening of costs and prices with the gradual recovery of the European economy and labor market resilience will allow regional GDP to rise to close to 1.5% at year-end, higher than CEOE envisioned at the national level.
In any case, the report reiterates its concerns over high inflation, citing Funcas’ forecasts released on February 15, which revised upwards forecasts for this year. If fulfilled, average inflation could be 4.2%.