Spain | Valencian Community Economic Outlook 2023

Summary

The economy of the Valencian Community will grow by 2.1% in 2023 and 1.9% in 2024. This will allow the creation of 96 thousand jobs in the biennium and reduce the unemployment rate to 12.2%.

Key points

• Key points:
• Growth could moderate over the coming months and there is a downward bias on the forecasts. Employment productivity would have shown an unexpected drop in the second quarter of 2023. Growth in 2023 has been reduced by 0.1 pp due to a lower dynamism of the external sector (tourism and goods exports) than anticipated a few months ago.
• Supply problems are perceived in certain sectors (tourism, construction) and domestic demand will be constrained by high interest rates and the necessary reduction of the public deficit in 2024. Economic policy uncertainty may increase.
• In 2024, European demand and continued high interest rates and energy costs will slow activity. Valencian GDP growth is revised down -0.2 pp to 1.9%. But growth may continue thanks to the strength of household and family balance sheets, the normalization that can be observed in industrial activity, the support that the acceleration in the implementation of European funds may bring, and the increase in the working-age population.

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