Spain | Catalonia Economic Outlook. Second half 2023

Catalonia's economy will grow by 2.7% in 2023 but will slow down to 1.8% in 2024. This will allow the creation of 180,000 jobs in the biennium.

Key points

• Key points:
• Positive data lead to revise Catalan GDP growth in 2023 upwards by one tenth of a percentage point. The good performance of external demand, particularly in services, has benefited an open economy like the Catalan one. The acceleration was particularly strong in Girona and Tarragona. In more recent months, there has been a better performance of domestic consumption and an acceleration in investment is beginning to be noticed.
• The forecast for Catalan GDP growth in 2024 is corrected downwards (-0.2 pp) to 1.8%, given the moderate deterioration of the global outlook in an environment of high uncertainty. Growth is already moderating and there is a downward bias on forecasts. Supply problems are perceived in certain sectors, and domestic demand will be constrained by high interest rates and the necessary reduction in the public deficit in 2024. Economic policy uncertainty may increase.
• It is assumed that the recovery may continue thanks to the strength of the balance sheet of households and families, the normalization that can be observed in industrial activity (particularly in the automotive sector, key for the Catalan economy), the support that may come from the acceleration in the implementation of European funds and the increase in the working-age population (which is increasing more than in the previous year).
• If these prospects are realized, the community could create nearly 180,000 jobs in the biennium and reduce the unemployment rate to 8.2% in 2024.

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