Recovery in Alicante’s tourism revenue drives regional growth but hints of slowing emerge
Recovery in tourism has become a key driver for Alicante’s economy and the wider autonomy after the pandemic. Still, growth capacity is showing signs of strain, a concern raised by the head of Economic Analysis during the Valencian Community Situation report briefing, which noted that activity is moving below 2019 levels in some metrics.
Compared with last year’s 5.6 percent increase, BBVA Research projects autonomous GDP growth at 2.1 percent for this year, slightly under the national average, and 1.9 percent in 2024, just above the national pace. The forecast still supports the creation of as many as 96,000 jobs in the region over a two-year horizon.
The analyst flagged a challenging international backdrop, with inflation tied to the Ukraine conflict and rising interest rates weighing on the global economy, especially in Europe. This environment prompted BBVA Research to reduce eurozone forecasts by four tenths, while the Valencia Community revision was only modestly lower. The mix of a smaller industrial footprint and a resilient tourism sector is shaping this outcome, as tourism continues to grow while energy costs affect the industrial base.
During the event, the regional team introduced the report “State of Valencian Society.” The presentation included David Conde, Elena Sánchez, Rafael Doménech, and Antonio Carreto discussing the outlook. The emphasis remained on tourism as a pivotal growth lever for the community.
The economist cautioned that tourism, though a strong growth engine, is reaching a capacity ceiling. After a two-year recovery, the sector has reattained 2019 turnover and even surpassed pre-pandemic levels, but the pace is moderating. For example, foreign tourism expenditure growth slowed after a rapid start to the year, with the increases cooling in the middle of the year and returning to more modest gains by autumn. Domestic travelers showed a similar pattern, with more moderate growth as the year progressed.
Doménech did not expect a steep drop in tourist activity. He suggested that future gains will require either more hotel capacity or a shift toward higher-quality service, including upgrading categories to move the market forward. In the Alicante Province, the quarter showed only a small rise in employment when seasonally adjusted, while the overall autonomous region registered a slightly stronger increase.
Another takeaway centered on domestic demand. BBVA Research foresees that next year could bring better performance from household consumption, underpinned by a stronger labor market, immigration-driven growth in the active population, and rising disposable income. Households may see roughly a 2 percent lift in disposable income overall, with consumption following a similar trajectory.
Footwear leads the drop in Valencia’s industrial output, reflecting a broader slowdown in the sector. The report notes an acceleration in non-residential construction activity, powered by European recovery funds, with construction visas in the Valencia Community exceeding 2019 figures by about 60 percent.
The report also touched on the Gaza situation. The assessment says the current conflict has had a limited impact on growth so far, but the risk remains if tensions escalate. Oil prices have been a key influence, helping keep inflation in check and supporting activity. The analysis highlights that a 10 percent rise in oil prices could trim growth by a fraction of a percentage point multiple times, underscoring significant uncertainty on the global stage. At the same time, American growth surprised positively, while the euro area underperformed, noted the firm.