Spain | The situation and outlook in Aragon

The economy in Aragon suffered a historic contraction in 2020, albeit a smaller one in absolute terms than in Spain as a whole. BBVA Research estimates that its GDP fell by around 9.5% last year, compared to a decline of 10.8% for the country overall.

Key points

• Key points:
• The fact that the impact of the crisis has been smaller can be attributed, firstly, to the size and competitiveness of an export sector that has responded positively to the crisis. Exports of goods had already returned to pre-pandemic levels by the third quarter of 2020.
• The second differential aspect of the Aragonese economy is its lower dependence on tourism, especially from abroad. This meant that the reduction in consumption expenditure was not as significant as in other autonomous communities.
• We expect the situation in the region to improve throughout the year and GDP to increase by between 5.5% and 6% in 2021 and by almost 7% in 2022. First, the vaccination drive can achieve herd immunity in the coming months, and second, the world economy will receive a significant boost as a result of the change in American fiscal policy.
• In addition, the NGEU program should boost public investment, which could benefit sectors in which Aragon has a competitive advantage such as the automotive industry and renewable energy production.
• There are risks relating to the uncertainty surrounding vaccine availability and confidence in vaccine safety. Moreover, doubts remain as regards when the economic benefits of the NGEU program will begin to manifest. Finally, work will need to be done to create a consensus that transcends political affiliation and thus enable reforms to be adopted.

Authors

Geographies

Topics

Tags