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Catalan GDP forecast down over ‘uncertainty’ concerns, says top bank

BBVA lowers economic growth prospects for 2019-2020 and warns of long-lasting impact on international tourism

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20 November 2019 06:21 PM

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ACN | Barcelona

Catalonia’s GDP is due to grow by 1.8% in 2019 and by 1.6% the following year, according to a report by the research team of Spain’s BBVA bank.

The forecast was lowered due to the "uncertainty" in Catalonia in October, which the report says had a "negative impact, although it seems to be temporary."

However, the impact on international tourism "appears to be greater and longer-lasting," say the report's authors.

Nevertheless, the expected growth in GDP in 2019 and 2020 could lead to the creation of 115,000 new jobs, reducing the average jobless rate to 11%.

Effects on spending

The political and economic "uncertainty" has affected spending by families and companies, with a rise in the saving rate and a "weakening" of investment. 

Specifically, the bank's researchers estimate that the "tension" in Catalonia in October has had a negative impact on GDP of up to two decimal points.

Looking at spending, the report shows that after October 18 foreign visitors "reduced spending significantly," as did residents in Catalonia, but to a lesser extent.

Regulation, legislation and tension abroad

Yet, the bank also attributes the slowdown in the Catalan economy to the effects of the "regulation of some sectors," especially the automotive industry.

Likewise, the report says new housing legislation has had a "negative impact" on the sale of homes, which has fallen 25% compared to the trend up to October. 

International instability has not helped the situation, with the researchers citing the effects of a possible hard Brexit and trade tensions between the US and China.

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  • Miguel Cardoso, leader of the BBVA Research team, during the press conference on the economic situation in Catalonia (by Marta Casado Pla)

  • Miguel Cardoso, leader of the BBVA Research team, during the press conference on the economic situation in Catalonia (by Marta Casado Pla)

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