The Valencian Community’s GDP is forecast to end the year with a 2.4 percent increase, according to CaixaBank Research. The forecast matches the national growth rate and is a notch higher than the September projection had suggested.
After posting a 5.7 percent improvement in the previous fiscal year, which was slightly below the national average, the Valencian economy showed notable resilience in the first half of the year, as reported by the analysts. Looking ahead to the second half, there is an expectation of softer foreign demand which could temper industrial activity and exports. On the bright side, employment remains strong and tourism is moving back toward pre-pandemic levels.
CaixaBank Research notes that domestic demand is expanding faster in the Valencian Community than in the country overall, with a 4.7 percent rise in subsidiaries in 2022, compared with 3.9 percent nationally. In October this year, growth slowed to 2.8 percent versus 2.6 percent in Spain, yet the number of subsidiaries surpassed October 2019 by 9.8 percent, and by 7.1 percent in Spain. Activities such as hospitality, healthcare, and especially education have been the most dynamic in terms of employment. The third quarter of 2023 recorded an unemployment rate of 11.8 percent, a figure that aligns with the national average and improved on the end-2019 level of 14.1 percent.
A view of the Las Atalayas industrial area. Information
Household consumption has become more affordable, and retail sales volumes rose by 0.1 percent in 2022, a figure that still outpaced Spain’s decline of 1.0 percent. In the January–September period of this year, year-on-year growth stood at 9.2 percent, higher than the national rate of 8.0 percent. By the end of the period, activity in private consumption was about 6.4 percent above 2019 levels, versus a 3.0 percent gain in Spain on the same baseline.
1.3 million families living in rent are at risk of poverty (the highest rate in the EU)
Industrial production overall grew slightly slower than the national average. The industrial production index (IPI) rose by 2.3 percent in 2022, just 0.1 percentage points below the national average, but it declined by 3.0 percent year-on-year from January to September 2023 due to softer external demand. Nevertheless, the index remained 0.5 percent above 2019 levels, while the national change stood at a larger decline of 1.1 percent.
Exports of goods in 2022 posted solid growth of 22.2 percent, just below the national pace of 22.9 percent. In a broadly positive environment, sales of semi-finished products, automobiles, and especially chemical products led the export performance. 2023 has not been as robust on a year-on-year basis through September, dropping 3.6 percent, compared with a 0.3 percent increase nationally, but exports remain more than 22 percent above their 2019 levels, signaling a long-term recovery behind the initial post-pandemic rebound.
Tourism remains a major regional component, though its weight is less dependent on international visitors than Spain as a whole. Foreign tourists accounted for about 52 percent of overnight stays in 2019, compared with 64 percent nationally. The regional recovery has been more modest: total overnight stays rose 55.5 percent in 2022, compared with a 73.3 percent increase across Spain, and the January–September period of this year shows an uptick of 3.1 percent above 2019 levels.