BBVA forecasts better growth perspectives for Catalonia and 140,000 new jobs in 2014 and 2015

Barcelona (ACN).- The Catalan economy’s indicators are posting positive results and the research department of the BBVA bank has reviewed its growth forecast for Catalonia for the current and the next years, taking into account the first figures of the second half of the year. According to the report issued on Thursday by the BBVA, the Catalan economy will grow by 1.3% in 2014 and by 1.8% in 2015, which are higher rates than those initially predicted. Furthermore, during the last quarter of 2014, Catalonia’s GDP could grow by 0.5% “or even” 0.6%, states the report. On top of this, 140,000 new jobs will be created in 2014 and 2015, which represents a 4.3% growth in employment. In addition, it puts an end to the negative trend that destroyed 17.3% of the existing jobs between 2008 and 2013. The creation of new jobs will also compensate for the 137.800 jobs that were lost in 2012 and 2013 in Catalonia.

The Head Economist of Developed Economies at BBVA Research, Rafael Doménech, has highlighted “the dynamism” of Catalonia’s economy. Part of this dynamism for 2015 is due to the fact that the Catalan Government did not fully honour the strict deficit objectives in 2014 and 2013, and therefore public spending brought additional activity to the economy, explained Doménech. However, he also praised “the very significant effort” made by the Catalan Government to reduce the public deficit in the last few years, although they will not be enough to meet the strict deficit objectives for 2014 and 2015, unilaterally imposed by the Spanish Government. According to Doménech, this will bring “an additional stimulus to the internal demand”, which will have positive effects on the Catalan economy.

In fact, growth will come because of the increase in internal demand and the good figures from the external one, which will still resist despite economic slowdowns in some of the world’s main economies. The internal demand will mainly come from the public sector and corporate investments, while domestic consumption will remain moderate, although it will be far from decreasing.

Catalonia is growing faster than the Eurozone

The BBVA expert highlighted that the Catalan economy has been consecutively growing and showing an increasing dynamism since the third quarter of 2013. In fact, during the last few quarters, “a gradual acceleration” can be observed, despite the slow-down of many other Eurozone economies. In fact, for the last 2 quarters, the Catalan economy is growing faster than the Eurozone average. This puts an end to the traditional parallel evolution of the Eurozone figures with Catalonia’s. Until now, when the European economy had been decreasing by 1%, the Catalan economy had tended to decrease by 0.9%. However, in the last two quarters, the Euzone economy is posting a stagnated 0.2% annual growth while the Catalan GDP is increasing by an annual rate of 1.2%. If such a trend is confirmed in the coming few months, this would have a very positive impact on the Catalonia’s economy, stated Doménech.

In addition, the BBVA Research report also points out the effect that currency exchange rates between the Euro and the Dollar can have on the Catalan economy. 6 months ago, 1 Euro was worth 1.40 Dollars, while currently the exchange rate is set at 1.25. This has a positive effect on Catalan exports, which lead the export sector in Spain. If the exchange rate continues to decrease and were to drop by 10%, this could bring up to 6 additional tenths of percentage point to Catalonia’s GDP.