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Basque Country and Aragon will lead economic growth in 2024, according to BBVA Research

Reviews the GDP of the autonomous communities downwards in 2024 and points to progress in 2025 due to internal demand.

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Basque Country and Aragon will lead economic growth in 2024, according to BBVA Research

Reviews the GDP of the autonomous communities downwards in 2024 and points to progress in 2025 due to internal demand


BBVA Research places the Basque Country and Aragon as the two autonomous communities that will lead economic growth in 2024, with forecasts for a GDP increase of 1.9% and 1.8%, respectively, according to estimates published by the research service from the bank this Monday.

BBVA Research has revised the 2024 GDP increase for Spain as a whole downward by three tenths, placing growth at 1.5%. The main factor is the recent worsening of activity in the eurozone. A part of the industry suffers from high energy costs. Furthermore, uncertainty about economic policy could increase in the coming months.

The revisions are generalized downwards throughout the peninsular territory and only the Balearic Islands and the Canary Islands escape this trend, although they will no longer be the communities that lead the growth of activity in 2024.

Thus, the corrections to the forecasts impact the northern communities to a greater extent, although BBVA Research continues to predict that these will be the ones that will lead economic growth in 2024. For example, growth estimates have been lowered by seven tenths for Navarra, up to 1.5%, because the automotive industry does not yet show clear symptoms of recovery.

For its part, in the Basque Country, the GDP forecasts have been cut three tenths, to 1.9%, given that the greater diversification of industrial products could soften the effects of the slowdown in Europe.

As noted in the report, investment may be especially affected by an environment of still high interest rates, a less significant than expected tractor effect from Next Generation EU funds and uncertainty about economic policy.

Specifically, BBVA's research service has warned that the slowdown in the execution of European funds translates into larger than average revisions in some of the regions most dependent on these public transfers: Extremadura (1.4%) and Castilla-La Mancha (1.3%) are revised down four tenths. "In addition, these two autonomous communities are negatively affected by the impact that the drought is having on part of their geography," the report states.

On the other hand, BBVA Research points out that fewer supply restrictions and difficulties with competitors give tourism room for growth. In particular, immigration is allowing job creation in the hospitality industry, while the hotel sector is one of the few where investment is growing strongly.

Thus, the GDP growth of the Balearic Islands (1.6%) is revised upwards by one tenth, and that of the Canary Islands (1.6%) by two tenths. Madrid (1.6%) and Murcia (1.6%) are reviewed less than Spain, while the impact of the European slowdown on the Valencian industry and the drought in Catalonia (1.4%) and Andalusia (1.4%) %) justify major revisions in these communities.

For 2024, BBVA Research's forecast for employment growth in terms of the Active Population Survey (EPA) is: Andalusia (2.4%), Aragon (2%), Asturias (1%), Balearic Islands (2. 3%), Canary Islands (2.6%), Cantabria (1.3%), Castilla y León (0.7%), Castilla-La Mancha (2.5%), Catalonia (2.6%), Extremadura (1.2%), Galicia (2.1%), Community of Madrid (2.3%), Region of Murcia (2.8%), Foral Community of Navarra (1.6%), Basque Country (1 .6%), La Rioja (1.3%) and Valencian Community 2.8%).

After the slowdown in 2024, BBVA Research predicts an acceleration in activity for 2025, when growth could increase to 2.5%, in line with the recovery of the European Union. A general improvement is expected due to the advance of domestic consumption and European demand, which will also drag down investment, which will also drag down investment.

As a consequence of the above, the communities receiving national tourism (Valencian Community (2.6%), Catalonia (2.7%), Community of Madrid (2.6%) and Andalusia (2.5%) will lead the growth. , but also some industrial and exporting ones, such as Navarra (2.7%) and the Basque Country (2.7%).

For their part, Asturias (2.1%), Castilla y León (2.2%) and Extremadura (2.6%) will have weaker growth, but still higher than their historical average and which will allow them to continue the process of convergence in GDP per capita.

BBVA Research broadly maintains its growth estimates for 2023, placing the increase in GDP for Spain as a whole at 2.4%.

However, the latest economic data lead to some corrections: on the rise, the cases of Murcia (three tenths, up to 2.1%) and the Valencian Community (two tenths, up to 2.2%) stand out, and the low, those of Extremadura (three tenths, up to 2%), Navarra (two tenths, up to 1.7%) and the Balearic Islands (two tenths, up to 2.9).

The growth forecast for the Canary Islands and Madrid remains at 3%, and that of Catalonia at 2.7%. The latest export and industry data justify the upward revision of one tenth in Castilla y León (2.5%), the Basque Country (2%) and Asturias (2.2%), although it is not enough for the last two grow more than Spain. On the contrary, the slow recovery of the industrial sector leads to downward revisions also in Cantabria (up to 1.9%).