Uncertainty in the international arena will directly affect the economy in the form of a slowdown. That’s what BBVA Research estimates in its latest report, which lowers growth forecasts for all autonomous communities, including Valencia, and doesn’t do very well. And the fact is that the forecast for this region next year 1.8 GDP growth, nearly half of what was originally planned, which would place it in the national average. The slowdown in European demand for goods and tourism is one of the main factors behind this revision.
For the third quarter of 2022, the BBVA Research Regional Observatory transfers to the regional level the scenario proposed for the whole of Spain, which foresees an upward revision in both tourism and goods exports this year, as well as investments in machinery and equipment. Services. Therefore, expected growth is expected to increase by 0.4 points in Aragon due to the revival in industrial activity, while it is estimated to be 0.2 points for Asturias and Basque Country as a result of greater export dynamism. Likewise, the acceleration of foreign tourism contributes to the 0.3 percentage point growth of the Balearic Islands, and to the Canary Islands, which remains at the top of the GDP growth this year.
On the contrary, Report predicts lower growth in private consumption in SpainThis will have a greater impact on the communities most dependent on national tourism. This is the case of the Community of Valencia, where the growth forecast was reduced by 0.1 to 3.8 percentage points; this is a similar percentage of decline as in Catalonia. It also fell 0.3 in Murcia and 0.2 and 0.6 in Madrid and Extremadura, respectively.
However, the situation is more complex in the face of 2023, a year in which a slightly larger slowdown in the economy than expected three months ago is expected. growth forecasts have been lowered overall. A decrease of 1.5% is projected for the Valencia region, leaving the increase in GDP at 1.8. Other important decreases are those affecting Navarra and Catalonia with a decrease of 1.7; 1.6 and the Canary Islands and Murcia; and Galicia, the Basque Country and the Balearic Islands, again 1.5.
Thus, a growth forecast of 1.8 for the Valencian Community next year Paired with Catalonia and Castilla-La Mancha. Balearic Islands with 3.5 points, Canary Islands with 3 points, Madrid with 2.6 points, Extremadura with 2.4 points and Andalusia with 2 points are ahead. Navarra and Asturias with 1.1 and 0.8. If these estimates are met, the Valencian Community Recovering pre-crisis GDP levels by the end of 2023.
Several factors may explain these downward revisions. On the one hand, lower growth prospects for the European Union due to the effects of the war in Ukraine Slowdown in European demand for goods and tourismIt will have a special impact on the Valencia region, the Canary Islands and the Balearic Islands. In addition, very high energy prices and possible scarcity could hinder the recovery of industrial communities, which are most dependent on energy consumption for their production and for which natural gas is a relevant resource. Similarly, an increase in interest rates and an economic slowdown will increase the financial burden on households and businesses, although the impact will be heterogeneous at the regional level.
On the other hand, BBVA Research warns that the recovery scenario forecast for the coming quarters may be affected by the increase in inflation, mainly due to higher energy costs. Persistent inflation, which drives wage growth and operating costs, also risk of losing competitiveness.