Spain | Comunitat Valenciana Economic Outlook. First Half 2024

Summary

The GDP of the Valencian Community could increase by 2.1% in 2024 and 2.0% in 2025, which would allow the creation of 103,000 new jobs in the region in the biennium.

Key points

• Key points:
• In 2023, GDP growth could have reached 2.3% (0.2 pp less than in Spain as a whole), after an increase of 5.9% in 2022. This would have allowed that in 2023 the region would have been the second community whose GDP level exceeded to a greater extent that of 2019.
• Growth in Social Security enrollment outpaced that of Spain in 1Q24, with significant increases in the urban areas of the capital. Spending with a credit card advanced more in transport services, accommodation, bars and restaurants, supported by the good performance of domestic and foreign tourism.
• GDP could increase by 2.1% in 2024 (Spain 2.1%). The European economy seems to have bottomed out and could show a progressive improvement during the year. The regional economy depends crucially on sustained sales of goods and services (tourism above all) to the Eurozone and higher margins in the sector may give way to increases in investment and wages.
• The GDP of the Valencian Community is expected to maintain its growth rate at around 2.0% in 2025 (2.0% in Spain). If these forecasts are met, the unemployment rate will fall to 11.1% on average in 2025 and 103,000 new jobs could be created by 2025.
• There are some risks: an environment of labor shortages and rising labor costs, with no significant gains in productivity; immigration may not be enough to offset the labor market slowdown and fill all vacancies; economic policy uncertainty; the measures that have to be implemented to reduce the public deficit.

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