Spain | Catalonia Economic Outlook. First half 2022

Catalonia's GDP grew by 5.2% in 2021. The sanctions imposed on Russia and the increase in fuel prices reduce growth expectations. Still, Catalan GDP could increase by 4.2% in 2022 and 3.5% in 2023, placing Catalonia among the most dynamic regions in the biennium.

Key points

• Key points:
• GDP growth in 2021 was boosted by the recovery in tourism, spending by Catalan households and businesses and the impact of public policies, both from the central and regional governments.
• Although the increase in activity will continue to be high in these two years, the consequences of the invasion of Ukraine will weigh on the recovery. The increase in the price of imported products and the effects on russian tourism are greater for Catalonia than for other autonomous communities.
• Several factors suggest that the number of tourists and the level of spending during the high season will be similar to or higher than those observed before the pandemic. These include the decrease in uncertainty about health, the use of savings accumulated during confinement, and the attraction of visitors seeking destinations that provide security.
• The Catalan economy has already recovered pre-crisis employment levels, while the unemployment rate will fall from 8.5%% in 2023 to levels similar to those of 2007. However, GDP will only recover to pre-crisis levels by the end of next year.
• Public policies will be key to minimising the effects of the war. The fall in electricity prices will be significant. In the absence of an incomes pact, the uneven impact of inflation may increase social unrest. Uncertainty persists about investment linked to the NGEU and spending could leak into higher imports in the face of supply constraints.

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