BBVA Research revises GDP growth in the Basque Country upwards in 2023 to 0.8%

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BBVA Research has revised the growth forecast for the Basque Country upwards for 2023, from 0.3% to 0.8%, and for 2024 it estimates 3.4%. The BBVA research service maintains its year-end forecast for the Basque Country at 3.5%.

These estimates come from the latest report “Spain Situation”, presented this Thursday by the entity. The growth forecast for Spanish GDP for 2022 is 4.6%, an upward revision compared to the previous estimate (4.4%).

Specifically, the Basque Autonomous Community, Navarra and Galicia lead the upward revisions in 2023. In 2024 activity will increase by 3.4%, driven by the normalization of activity in Europe and the higher rate of execution of the NGEU funds.

The consumption begins to suffer a deceleration due to inflation, uncertainty and lower job creation. However, card spending registered at BBVA POS terminals shows that household spending, in real terms, continues to grow in all communities also in the fourth quarter of this year.

Regarding Social Security affiliation, the study underlines that surprising resistance of employment behaviorwhich remains positive after a slowdown in the third quarter of this year.

BBVA Research has drawn attention to some risks to take into account in the Spanish economy for the coming years. The first of them, the possibility that the tourism don’t push so much as in the last two years and doubts about its evolution in the coming quarters, given the “loss of competitiveness registered, the adjustment in demand due to the fall in household income and possible changes in consumption habits”.

Another risk is inflation, which may remain high in the coming months. As they have pointed out, the increase in prices, previously mainly linked to energy, is becoming general, which suggests that companies “are trying to recover part of the lost profitability”. Wages increase, but without recovering the pre-pandemic purchasing power, and therefore, they believe that “the consolidation of the income agreement will be key to the future evolution of inflation.”

Finally, they have stressed that, although the implementation of the NGEU funds seems to be gaining momentum, its impact “will still take time to reach families and companies”.