Spain | Extremadura Economic Outlook 2022

Extremadura's GDP could grow by 5.2% in 2022 and 2023, boosted by pandemic control, household savings, European funds (NGEU) and unused productive capacity. But the conflict in Ukraine could reduce growth to 4% in both years if there is no quick resolution.

Key points

• Key points:
• The weaker and less impactful recovery of tourism, and a consumption that also accelerated later, limited the advance of employment, services and local industry. This was not compensated by an external sector that was somewhat more dynamic, but less relevant for the regional economy.
• From the summer of 2021 onwards, the foreign economy accelerated strongly. The strong recovery was only slightly dampened by the upturn in the pandemic associated with Delta and Omicron, and this trend continues into the beginning of 2022. Driven by tourism and expansionary fiscal policy, consumption also accelerated in the second half of the year.
• The conflict in Ukraine marks a downward bias on growth forecasts that could push growth in the region to around 4% in 2022 and 2023 if it drags on. Risks associated with higher inflation, central bank response and geopolitical risks are starting to become important. In addition, the implementation of NGEU-related funds needs to be accelerated. In the medium term, the bias will depend on the reforms to be adopted in the coming months.
• If these forecasts are fulfilled, the economy could create almost 31,000 jobs in the biennium.

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