SANTA CRUZ DE TENERIFE, Oct 27 (EUROPA PRESS) –
BBVA Research foresees that the Canary Islands could grow this year by 5.4%, one tenth below the national average, due to the fact that the extension of the state of alarm until well into June and the restrictions on international travel made it difficult to take advantage of their peak season and, with it, they slowed down job creation. However, the normalization of the arrival of visitors will allow the Canary Islands to be the community that grows the most in 2022 (8.7%), after the difficulties experienced this year.
According to the Regional Observatory for the fourth quarter, for this year BBVA Research foresees strong growth in all the autonomous communities, although less than expected in July when the previous observatory was published. Various factors would explain these forecasts. On the one hand, progress in vaccination and the easing of restrictions would have contributed to strong growth in domestic consumption.
The improvement in health indicators and the lifting of the state of alarm boosted national tourism spending in a generalized way in the second quarter of 2021 and continued in the third. This would have particularly favored the island communities and Andalusia. However, the lack of business and urban tourism conditions the growth of activity in Madrid and Catalonia, which are also affected by restrictions on international travel.
For its part, card spending by foreign tourists in the third quarter would have exceeded the level of the same period of 2019 in the Balearic Islands, Murcia and the Valencian Community. This allows all the Mediterranean and island coastal communities, the main destinations for beach tourism, to have a favorable differential factor for growth this year. Thus, the Balearic Islands (7.5%), Andalusia and the Valencian Community (5.5%), Murcia and the Canary Islands (5.4%) and Catalonia (5.3%) will grow above the average.
Despite the fact that consumption seems to consolidate its recovery in the central quarters of the year, investment and exports are performing worse than expected. Various factors explain this behavior. On the one hand, problems in international transport, in the supplies of some products and the cost of energy have broken the value chains, hindering the recovery of industrial activity and slowing down export activity, key to the recovery of some communities .
On the other hand, the high uncertainty and the delay in the implementation of European aid are holding back investment, both in capital goods and in construction. Although this affects the activity of all regions, some are being affected more than others. Thus, those with more weight in the exporting of goods or with a high weight in the industrial sector (particularly in affected sectors such as the automobile) will see their growth more limited this year.
As a consequence, La Rioja (4.4%), Basque Country (4.6%), Aragon (4.7%), Extremadura and Navarra (4.8%), Castilla y León and Castilla-La Mancha (4, 9%) and Asturias (5.1%), will grow below the average for Spain in 2021. In this case, the exceptions for this year are Cantabria (5.9%) and Galicia (5.6%), in those that the exports and the national tourism would be behaving better than in the rest of the Cantabrian coast.
For its part, the delay in the reactivation of public investment and residential construction (also affected by the uncertainty associated with legal insecurity) also conditions to a greater extent the communities of southern Spain, in which the role of the public sector in the economy it is higher.
ACCELERATION OF GROWTH IN 2022
BBVA Research forecasts that Spain’s GDP will remain strong for the second year in a row and accelerate to 5.5%, although it reduces the forecasts of three months ago for all communities. On the one hand, the recovery of tourism will advance, but at a somewhat lower rate than anticipated a few months ago, due to the downward revision of growth in European demand. The normalization of the arrival of visitors will allow the Canary Islands to be the community that grows the most next year (8.7%), after the difficulties experienced in 2021. Balearic Islands (8.4%), Madrid (5.8%) and Catalonia (5.6%), which could begin to notice the return of urban tourism, will form the group of communities that will increase above the national average.
On the other hand, after a year of strong acceleration, national tourism will not have the same contribution to growth as this year. Andalusia (5.2%), Murcia (5.1%) and the Valencian Community (5.0%) will see a lesser push through this route, which will lead to growth below the national average. Also contributing to this is the slow start-up of European investments, which will affect the southern Mediterranean communities and Extremadura (5.1%).
On the other hand, the resolution of bottlenecks and the recovery of value chains is also less rapid than previously expected, and limits the progress of the communities most dependent on the demand for goods, whether external or internal. Asturias (4.5%), La Rioja (4.8%), Castilla y León and Castilla-La Mancha (4.9%), Basque Country (5.2%), and Aragón, Galicia and Navarra (5, 4%) will grow below average.
However, only Cantabria, Galicia, Castilla-La Mancha, Extremadura, Murcia and Aragon could recover pre-crisis activity levels in 2022.
UNCERTAINTY FACTORS.
The recovery scenario foreseen for the coming quarters could be affected by the delay in the execution of the NGEU Funds, as well as associated investments. Furthermore, the cost of energy limits the recovery of industrial areas, where it is most necessary for them to transform their production chains in the medium term to reduce their greenhouse gas emissions.
On the other hand, although the risk associated with the pandemic has been reduced, the situation in the main European countries should be monitored to avoid internal outbreaks, which could especially affect the Balearic Islands, the Canary Islands, Catalonia, Madrid, the Valencian Community and Andalusia.
Likewise, the eruption of the volcano on La Palma poses a risk to the perception of security offered by Spain. At the moment, there is no negative impact on card spending in the Canary Islands by foreigners as a consequence of these factors.
