BBVA Research’s latest economic report suggests the Balearics and Canaries will lead regional growth this year and in 2022 thanks to tresumption of tourism. At present, this recovery is particularly pronounced at the national level, with the surge in foreign tourism expected to be much stronger next year.
Based on information until mid-summer, BBVA claims that the Balearic Islands and Canaries will see growth this year of 8.3% and 6.9% respectively, although this partly reflects the declines they experienced last year.
Domestic consumption is expected to accelerate growth in other regions, with a forecast of 6.7% for Andalusia and Valencia.
For 2022, the analysis indicates that Spain’s GDP growth forecasts remain at 7% and that the recovery in foreign tourism will continue to be the key to supporting double-digit increases in GDP in the Balearic Islands (up to 11.6%) and the Canaries (10.7%) .
BBVA point to two key variables that will influence growth forecasts. The first concerns the control of the pandemic and its effectiveness. Without further highs and lows and limitations to activity, confidence will improve and could translate into higher-than-expected growth.
The other concerns doubts about the implementation and effectiveness of the EU distribution. Next Generation Fund. The Spanish government‘s recovery, transformation and resilience plan “seems sufficient and ambitious in terms of diagnosis, implementation and amount, but doubts remain as to the implementation of the necessary reforms in the coming years”.
Regardless of BBVA Research, concerns are expressed about the potentially negative impact of the rise in electricity and fuel prices. Professor of Applied Economics at the University of the Balearic Islands and Managing Director of Fundación Impulsa, Antoni Riera, says economic recovery depends primarily on the cost of debt, and “an increase in inflation would lead to an increase in the cost. debt “. a The objective of macroeconomic policy, he adds, should be to keep inflation close to 2%.