Political crisis leads to 0.2% reduction in 2018’s GDP forecast, says Chamber of Commerce

The GDP growth forecast for 2018 has been lowered from 2.7% to 2.5% by the Chamber of Commerce due to the ongoing political uncertainty between Catalonia and Spain.

It maintains that, with regard to 2017, yearly growth will continue, but due to the current crisis, quarterly growth will be affected, dropping from 0.8% in the third quarter to 0.5% in the fourth quarter.

“The economy is driving a strong positive inertia,” said the president of the chamber Miquel Valls, “that explains the maintenance of the annual forecast, but the reduction in the quarterly rate may mark a turning point.”

Dialogue and reconciliation

Valls also said that he believes an independent mediation commission, dialogue, and reconciliation, are needed in order to solve the political situation between both governments.

At a press conference on Tuesday morning, he called called for “responsibility” from political leaders who “have broken an economic recovery that had been achieved in recent years.” He also rejected both a declaration of independence as well as the application of Article 155.

Referring to the march of more than 1000 companies from Catalonia, he said that the “bad has been done.”

"From the Chamber, we believe that it is essential that Catalonia and its capital, Barcelona, ​​remain the headquarters of large companies and that decision centers, high value-added services and associated talent remain here," he said

"This is an example of the current political situation. It is a worrying fact, since many of the companies that have moved represented an important part of exports, turnover and employment in Catalonia", concluded Valls.

Politics will not affect economics

On the other hand, Girona’s Chamber of Commerce has assured that the moving of corporate headquarters out of Catalonia will have no effect as industry and workers are staying put.

He did mention that the exodus of companies from Catalonia would mean the country would stop collecting some taxes. “Most of these, however, already went to Madrid, and now there will be some more, but it will have no effect on economic activity,” commented the chamber’s president Domènec Espadalé.

He also expressed his support for the leaders of ANC and Òmnium Cultural, Jordi Sánchez and Jordi Cuixart, emphasizing that charges of sedition are unfounded, believing that politics will not affect economy.

Referring to recent economic data, including export statistics and the record number of overnight hotel stays in September, he maintained that the political situation “has not affected the economy.”

Caixabank does not change GDP forecast for 2017

CaixaBank, which moved its social headquarters recently to Valencia in response to a possible declaration of independence and how that might affect the economy, has not changed its GDP growth forecast for 2017, regardless of the political circumstances.

The CEO of the bank, Gonzalo Gortázar has expressed his confidence in the capacity for dialogue between the Catalan and Spanish governments in order to prevent the political crisis from being prolonged over an extended period of time. He did confirm that the crisis had a “moderate effect” on deposits, and also said that if it continues it may affect consumer decisions.

Damage to the economy

Gortázar has maintained his confidence in the capacity for dialogue between the political parties, the Spanish government, the Government and the Senate to prevent the Catalan political conflict from being prolonged too much over time. Although he did say that if the crisis continues, it would have a damaging effect on the economy.

In any case, as the true weight of the political crisis became known in October, its impact on economic activity would not be noticeable in 2017.

An increase in profits

Thanks to the integration of Portugese bank BPI, CaixaBank actually beat profit forecasts for the third quarter of 2017, making nearly 1.5 billion euros, 53.4% more than the same period in 2016.