Spain | Andalusia Economic Outlook. First Half 2023

BBVA Research forecasts that Andalusia's GDP will grow by 1.3% in 2023 and recover pre-Pandemic levels. By 2024, the increase in activity will accelerate to 2.4%, and during that year it is expected to be able to recover GDP per capita.

Key points

• Key points:
• If these forecasts are met, Andalusia could create more than 100,000 new jobs by 2024.
• The economy is slowing down, although less than anticipated a few months ago. The relatively high private indebtedness, together with the greater weight of high-inflation goods in Andalusia, could mean that the increase in prices and interest rates could further limit the contribution of domestic demand. The drought is having a negative impact on the agricultural and food sectors. Fuel and high energy prices mean a loss of competitiveness for exporters.
• Activity will gain traction as NGEU funds are implemented and uncertainties affecting households and businesses fade. Progressive resolution of bottlenecks and certainty about the cost of energy will support the recovery of the industrial sector, with particular importance for air transport.
• Numerous factors could cause this scenario to deteriorate: the extension of geopolitical tension; complications in China (Covid, confinements) that could jeopardise the availability of inputs and the progress of exports to that country; or the lack of an income pact that could lead to high inflation.

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