Spain | Outlook for Andalusia's Economy

Summary

Andalusia's GDP may have shrunk by 11.2% in 2020 and might grow 5.4% in 2021 and 6.6% in 2022. Public policies lessened the impact of COVID-19. Consumption and investment will drive the economy through 2021. Although with risks, the situation will normalise towards 2022.

Key points

• Key points:
• Among the factors that explain Andalusia's slightly larger fall in GDP than that of Spain (11%) are the reduction in consumption due to the restrictions imposed on mobility, the importance of the tourism sector, and the contraction of exports.
• The impact has been heterogeneous: the greater importance of social consumption and tourism led to a greater contraction in enrolment in tourist areas, especially on the Malaga coast. Conversely, areas with a greater component of essential activities (agricultural and/or public) fared better.
• Although investment and tourism will improve in 2021, they will do so from low levels. The impact of NGEU-linked resources will still be small in the first half of 2021. Growth in 2022 will be supported by the recovery in consumption and investment (NGEU), together with a return to normality in tourism.
• If the forecasts are met, 128,000 jobs will have been created between 2019 and 2022.
• The main risks include the pandemic, addressing necessary reforms and the distribution of NGEU funds.

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