Published on Thursday, April 20, 2023 | Updated on Thursday, May 4, 2023

Spain | Basque Country Economic Outlook 2023

In 2022, GDP growth in the Basque Country would have reached 4.4%. The recovery is expected to continue in 2023 and 2024, with advances of 1.3% and 2.9%, respectively. GDP and GDP per capita could return to the pre-pandemic level this year.

Key points

  • Key points:
  • If these forecasts are met, the Basque Country could create 24,600 new jobs in the next biennium (slightly more than 12,000, on average, per year) and place its unemployment rate at 7.2%, thus remaining the region with the lowest unemployment.
  • The economy is slowing down, although less than anticipated a few months ago. Rising fuel and energy prices pose a challenge for Basque exporters, particularly if the price differential with the main European competitors persists.
  • The increase in inflation and the rise in interest rates are having a negative impact on spending, although less than expected. The Basque Country shows a lower increase in prices than Spain as a whole. In addition, the Basque private sector has below-average levels of indebtedness.
  • Activity will gain traction as NGEU funds are executed and the uncertainties affecting families and companies fade away. The progressive resolution of bottlenecks and certainty about the cost of energy will support the recovery of the industrial sector, with particular importance in the automotive and capital goods sectors.
  • One of the challenges facing the Basque Country is to find specialized labor to respond to the recovery of companies with a high technological level. And this problem could increase with the boost of European funds, particularly if their implementation involves the expected boost of digitalization.

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