Published on Wednesday, February 22, 2023

Spain | Extremadura Economic Outlook 2023

The GDP of Extremadura increased by 4.1% in 2022. We forecast an increase of 1.5% in 2023 and 3.2% in 2024, which will allow the creation of 15,500 new jobs between 2022 and 2024.

Key points

  • Key points:
  • The economy slows down. The stagnation of the Eurozone will give rise to a negative contribution of external demand to growth in 2023 and 2024, while the increase in interest rates will reduce the contribution of internal demand.
  • Household spending will be affected by rising prices, greater uncertainty, and the slowdown in employment. In addition, industrial activity could suffer the effect of the late resolution of bottlenecks and energy costs, and in the agricultural sector, the drought may also be affecting.
  • Activity will gain traction as NGEU funds are executed and uncertainties fade. The correction in inflation will continue and there appear to be no problems in gas supply. Businesses and households are better prepared to face a more volatile environment. No imbalances in economic sectors are observed.
  • The factors that could deteriorate the scenario continue to be numerous. Geopolitical tension could spread. The lack of an income pact could lead to inflation remaining high. There is a need to provide certainty about the tax burden and the sustainability of public finances. Lack of adequately educated human capital is a constraint to business growth.

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