Bank’s working service BBVA raised its growth forecast for GDP of all autonomous communities in 2023 due to the industry And tourism, according to a report released this Wednesday. The recovery of the tourism sector in the face of the end of the pandemic and the resolution of the bottlenecks experienced after the introduction of European funds and the end of all restrictions is behind the recovery in the economies of the region. The examination of this center for the regions, improving the forecast for the country as a wholeThat’s four-tenths above the latest forecast of 1.6% for 2023.
Balearic Islands It will be the community that will lead the growth It was followed by the Canary Islands (2.8%) and the Community of Madrid (2%) with an increase of 3.3% in 2023. The Principality of Asturias and the Region of Murcia, with an increase of 1%, and the Galicia Region of 1.1% are lagging behind. Looking ahead to 2024, due to the rise in interest rates, activity will increase by 2.6%, eight-tenths less than the research service’s latest observatory predicted, which will weaken the recovery in consumption and lead to a gradual slowdown in consumption. tourism that will cool investment.
The definitive elimination of bottlenecks in 2023, increase the registration by more than ten points. The rest of the communities, which are more focused on the production of other goods, may see a slightly slower recovery, which translates to smaller GDP revisions in La Rioja, Cantabria, Madrid and Asturias, while drought weakens progress in the south. To this must be added the growth that investment linked to European funds can bring.
On the other hand, The revival of tourism after the final end of the restrictions and the desire to travel after the pandemicwill significantly increase regional growth. In addition to sun and beach tourism, urban tourism and fairs or businesses are also picking up, accelerating tourist spending, primarily foreigners, in communities like Madrid or Catalonia.
The economies of communities with more industrial capacity will benefit in 2023 and increase them in 2024 if their economies reduce the prices of energy, transport and imported inputs. The growth forecast for Navarra, Galicia and Castilla y León for the next year is 2.8%, while the Basque Country, Asturias, Cantabria and Catalonia will grow by 2.9%.
Competitiveness despite price increases
BBVA Research finds no deterioration in competitiveness despite significant price increases for goods and services in Spain. Commodities exporting goods have increased their prices similarly or even less than their competitors, while tourist communities have not shown lower price increases than other relevant European tourist destinations.
Job creation is another factor showing strength in the Spanish economy, according to BBVA Research. After a significant slowdown in employment in the second half of 2022, the Social Security record is showing signs of strengthening in the first quarter of this year. BBVA Research predicts that all autonomous communities will return to positive job creation rates, with the Canary Islands, Madrid, the Community of Valencia and Catalonia, which are leaders in job creation in Spain.. Concerning the real estate market, uncertainty and an increase in rates will lead to a decline in housing transactions, particularly in northern communities marked by low labor market activity.
The threat to the recovery of consumption
The increase in interest rates will be the biggest threat to the recovery in consumption and investment.According to the BBVA Research report. This will significantly damage the regions with the greatest weight in consumption, such as Madrid and Catalonia. This low dynamism will also affect tourism, especially in the Balearic and Canary Islands. In addition, analysts from the bank’s research service point out that the country will grow to 2.6% next year, with GDP growth above average in Asturias, the Balearic Islands, Cantabria and the Basque Country.
The most notable thing for 2024 is that all autonomous communities will have recovered their 2019 GDP level, according to projections led by BBVA Research. Regarding employment, Analysts believe the unemployment rate will rise to 2.8%, 1.5 more than in 2023, and the latest increase in the Inter-Occupational Minimum Wage (SMI) will reduce job creation by 0.2 to 1.2 percentage points in 2024.Extremadura, Murcia and the Canary Islands were the most affected communities.
Finally, Investment in communities in northern Spain may be affected by energy costExports driven by the improvement in European demand and a lesser slowdown in consumption will allow for smaller revisions than those in the Mediterranean autonomous communities.