Spain | Regional Economic Outlook. March 2023

The GDP growth forecast for all the Autonomous Communities increases in 2023, with greater momentum in the industrial and tourist regions. But the forecast for 2024 is reduced: inflation moderates the increase in consumption in the Mediterranean regions, and the improvement in Europe will not be enough to compensate for it.

Key points

• Key points:
• Upward revision in 2023. There has been no contraction in activity in the face of higher energy prices, bottlenecks are disappearing, growth forecasts are improving in the global environment and domestic demand is supported by savings accumulated in the pandemic and some public policies.
• The rapid correction in fuel prices, together with the gradual disappearance of supply and demand constraints, will benefit different parts of the industry. This would favour to a greater extent the regions with an important weight of the automotive sector, machinery and equipment, the textile sector, the food sector: Navarre, Galicia, the Basque Country, Castile and Leon and Catalonia the most upwardly corrected.
• The strength of activity in 2023 will have kept inflation high, which in 2024 could erode the purchasing power of households and increase business costs. This, together with rising interest rates, threatens the recovery of consumption and investment. The most consumption-driven regions see larger downward revisions.
• Although the recovery in European demand accelerates the activity of the most exporting regions, the cost of energy will remain high, limiting their progress.
• All regions will have recovered their GDP levels by 2024.

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