The Valencian Community will be one of the fastest growing in 2021 but without recovering pre-Covid levels
BBVA Research estimates a fall in GDP this year of 11.6% and an increase for 2021 of 6.3%, due to the improvement in exports and the reactivation of tourism if there is a vaccine
The summary of the economic horizon that is looming could well be the following: the regions that in this year of the pandemic have managed to withstand the storm somewhat better will see a weaker recovery in 2021. It is one of the conclusions of the BBVA Research Regional Observatory for the fourth quarter, which allows us to predict that the Valencian Community may be one of the great beneficiaries next year in terms of economic reactivation. Of course, without recovering much less what was lost in 2020 due to the crisis derived from Covid.
According to BBVA Research forecasts, GDP will fall in the whole of Spain in 2020 by 11.5%. The drop will be even greater in the Valencian Community (11.6%), which is highly exposed to the tourism debacle as a result of sanitary restrictions. However, If a rebound is estimated for 2021 with a GDP growth of 6% in Spain, in the Valencian Community it could even be 6.3%, a figure only surpassed by the Balearic Islands (10.5%) and the Canary Islands (8.5%). And this is because “the expected appearance of a vaccine and the plans to support the recovery of foreign tourism will push forward the activity in the Balearic and Canary Islands, which will be the most dynamic in 2021.”
In the case of the Valencian Community, in addition to benefiting from the recovery of international tourism if there is a vaccine, will take advantage of the fact that it does not depend as much as other regions on sales to the European market, since its exports go far beyond the Community borders. In this sense, “with the slowdown in the European economy, the communities with the highest concentration of exports to the euro area such as Galicia, Castilla y LeÃ³n, La Rioja and Castilla-La Mancha reduce the chances of recovery, while Navarra, Murcia, Comunidad Valenciana, Catalonia and the Basque Country, more exposed to third countries, could obtain a greater advantage from the advance of exports “.
On the other hand, growth in the third quarter of 2020 is somewhat stronger than expected, especially due to the rebound in industrial activity in Spain linked to food and energy. But this recovery of the industry is not homogeneous in Spain, although it stands out precisely that “among industrial engines, only the Valencian Community of Valencia shows a relevant improvement and supported by the manufacturing industry“In fact, it is together with Murcia and Extremadura one of those that recovers the pre-Covid level in industrial activity.