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Published on Monday, April 25, 2022

Spain | Regional Economic Outlook. Second Quarter 2022

GDP growth in Spain is revised downwards in both 2022 and 2023 due to the impact that the invasion of Ukraine, the sanctions imposed on the Russian economy and the increase in prices, especially fuel prices, will have.

Key points

  • Key points:
  • The communities with a higher intensity of energy use in their GDP and more dependent on imported products see their growth forecast lower and, in general, are the ones that will grow the least in the biennium: Aragón, Castilla y León, Cantabria, País Basque, Galicia, Asturias, Navarra, La Rioja and Castilla-La Mancha.
  • Despite the fact that foreign tourism may be affected by an increase in the cost of transport, the Canary Islands and the Balearic Islands will remain the communities with the highest growth this year. Their revisions are lower than average, protected by the security of the Spanish tourism market and a lower than anticipated impact of the pandemic. Madrid and Catalonia are also favored by this factor, as well as by activity in higher value-added services.
  • With a lower weight of energy in their economies and exposure to the difficulties generated by international bottlenecks, Murcia, C. Valenciana and Andalucía, in addition to Extremadura, could experience growth somewhat more similar to that of Spain as a whole. In 2023, 13 communities will recover the GDP level of 2019.
  • Public policies are going to be key to minimizing the effects of the war. The drop in the price of electricity will be important. In the absence of an income pact, the unequal impact of inflation can increase social conflict. Uncertainty about investment linked to the NGEU persists and spending could leak into higher imports in the face of supply constraints.

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