Spain | Regional Economic Outlook. Third Quarter 2022

Spain's GDP will grow by 4.1% in 2022 (in line with what was forecast three months ago), but private consumption is revised downwards and investment and exports, both goods and tourism services, are revised upwards. On the other hand, growth for 2023 will be lower due to the slower progress in European demand.

Key points

• Key points:
• The greater weakness of private consumption in the first quarter of the year would have particularly affected the Autonomous Regions of the Mediterranean (more dependent on national tourism) and the south of the peninsula. Thus, the GDP growth forecasts for the economies of Murcia, C. Valenciana and Catalonia are revised downwards. The delay of the NGEU funds has a negative impact on the prospects for the economy of Extremadura.
• A better-than-expected evolution in investment and in exports of goods would have benefited the behavior of the economy in the northern Autonomous Communities, although in a heterogeneous way. The foregoing translates into a greater increase in GDP in Asturias, Navarra, the Basque Country and Aragon.
• Foreign tourism explains the strong growth in the islands. Although the forecast for the Canary Islands is maintained, that of the GDP for the Balearic Islands is modified upwards.
• The slower progress in European demand, both in goods and in tourism, is the main thread that drives the change in the outlook for GDP in 2023. As a consequence, the largest revisions occur in Aragon, Navarra, Galicia and the Basque Country among the industrial . The Canary and Balearic Islands will be affected by the possible drop in demand for tourist services. In Catalonia, Murcia and the C. Valenciana it is the combination of both factors that leads to a somewhat higher adjustment than in the national group.
• The recovery scenario forecast for the coming quarters could be affected by the rise in inflation, due in part to the high cost of energy. In addition, uncertainty remains regarding the investments associated with the execution of the NGEU Funds, which remains slow although the transfer of funds is progressing.

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