Spain | The economic storm clouds are gathered mainly in the North

In the last few months, a depression appears to have arrived that has poured cold water on economic forecasts — affecting in particular the autonomous communities of the North. This correction, however, does not stop us from repeating once again that in both 2021 and 2022, growth is expected to reach historical highs.

Key points

• Key points:
• On aggregate, in the first three quarters of this year, growth has been largely supported by the recovery in household consumption. The increase appears to be mainly focused on services, while expenditure on goods has been more reticent.
• Although all the autonomous communities have seen a slowdown in activity, Andalusia, the Community of Valencia, Murcia and Catalonia seem to have been protected to some degree by the domestic tourist boom and grew above the national average.
• These economic storm clouds have also brought with them problems in goods output and export, which reduces confidence and limits the recovery in investment. Its effects have also been generalized, but are greater in La Rioja, Basque Country, Aragon and Navarre — areas which specialize more in the production of goods.
• The speed of recovery in foreign tourism helps explain why growth has been slower than previously anticipated. Beach tourism appears to be gaining momentum, driven in the main by the Balearic Islands and—to a lesser extent—the Canary Islands: however, it is ocurring later and with less impetus than expected.
• Finally, the lack of activity in the public sector is another factor that has put a brake on growth. The arrival of EU funds, which will provide an injection of resources on a scale previously unseen, is expected to act as a major growth driver.

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