Regional Analysis Spain. Fourth quarter 2019

Summary

Growth revised downwards due to weak European consumption and demand, with more impact on northern regions and tourist destinations.

Key points

• Key points:
• The changes in the National Accounts, the most recent activity data and the deterioration in the outlook for EMU point to a generalised review and downward trend in growth forecasts in Spain and its autonomous communities. The regions of the north of Spain, together with the Canary Islands, are those that experience the greatest slowdown in activity and, as a consequence, the greatest downward adjustments.
• By components, in 2019 the deterioration has been intense in household spending. This is particularly evident in the island, central and northern regions of the peninsula. On the other hand, exports of goods show an erratic behaviour, and exports of tourist services are slowing down, among other factors, due to lower European demand, worsening the prospects for the island regions. The good tone of business and urban tourism would be behind the differential favourable behaviour of Madrid.
• In 2020, the prospect of weak growth in the euro area will limit the dynamism of the most commercially exposed communities and those receiving European tourists.
• The increase in economic policy uncertainty will be a determining factor in activity. Laxer monetary policy, with lower interest rates, could partially mitigate this effect, but with a heterogeneous impact.
• Finally, the dynamism of the real estate market, aided by expansionary monetary policy, will remain heterogeneous. The densest urban areas, such as Madrid and Barcelona, may continue to see a differential evolution.

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