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Published on Wednesday, December 1, 2021

Spain | Galicia Economic Outlook 2021

Galicia's GDP could grow by 5.6% in 2021 and 5.4% in 2022. If the forecasts are met, Galicia will be one of the regions that recovers the pre-crisis level of activity the fastest and some 33,000 new jobs would be created between 2020 and 2022. There is a downward bias on these forecasts.

Key points

  • Key points:
  • Consumption acts as a support and is the main driver of strong growth, especially in services.
  • Recovery of domestic tourism in the Xacobeo year. The progress in vaccination, the lifting of the state of alarm and the easing of restrictions allowed the arrival of visitors, particularly those resident in Spain. The foreign segment remains below pre-crisis levels.
  • Industrial activity and goods exports are recovering at a good pace, spurring investment in capital goods, which is already above 2019 levels. In addition, housing starts are picking up, but residential construction is not yet accelerating, affected by regulatory uncertainty and costs.
  • The resolution of bottlenecks is delayed, and the price of transport, raw materials and electricity are rising, as well as inflation is becoming entrenched. Energy costs limit the resilience of industrial areas and their investment, especially in regions with higher energy consumption per unit of GDP produced.
  • Growth could be around 5.4%. This will allow 33,000 new jobs to be created between 2020 and 2022. Supported by the existing savings pool, consumption will remain strong. In addition, tourism will move towards normalisation. This will be especially noticeable with foreign and urban tourism. Public investment is expected to accelerate.

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