Air passenger transport is one of the mainstays of the tourism sector's value chain. For this reason, and in a similar way to the rest of the sector, it experienced a huge slump in 2020 in the wake of COVID-19. Airlines are currently having to tackle a combination of high capital costs due to their large structures and an almost total lack of operating income. The evident need for liquidity among Europe's airlines has led some governments to inject public capital to prevent their collapse. However, 2021 looks like being the watershed the tourism sector needs: the progress made by the vaccination roll-outs and the approval of measures such as the health passport will be crucial for air passenger transport to embark on the road to recovery and return to being one of the mainstays of tourism.
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The Spanish economy has kicked off 2025 with widespread growth, albeit slightly more moderate than that of the previous year. Despite the global challenges, such as the protectionist shift in the US, half of its sectors are showing signs of expansion, most notably the chemicals and pharmaceutical industry. This buoyancy across the various sectors, coupled with the country’s competitive advantage in renewable energies, bolsters the resilience of the economy amid an uncertain international environment.
The Spanish residential market has suffered from a slump in foreign demand during the pandemic. Restrictions on international travel have hit the most tourist-oriented areas of the Mediterranean coast and islands particularly hard, which have seen a sharp fall in purchases by foreigners. Nevertheless, although house prices in these tourist-oriented municipalities have seen a marked slowdown, the adjustment was very moderate until Q1 2021 and the outlook for the coming quarters is good, thanks to the revival of international tourism, especially in the coming year.
Foreign demand has been one of the factors supporting Spain's real estate sector throughout its recovery. House purchases by foreigners have tripled in just 10 years, reaching the substantial figure of 65,300 homes in 2018, 12.6% of the total. This article looks at the foreign demand for housing in Spain as well as factors that will affect the trend over the coming quarters.
Analyzing of consumption growth since May 2021, when the last state of emergency ended, we can see that the recovery in spending on transport, and especially on leisure, hospitality and tourism, was particularly strong. The sectors hardest hit by the restrictions (most of them still in force in Q1 2021) are therefore the ones that are recovering the most. On the other hand, consumer durables (furniture, textiles, etc.) have benefitted much more modestly from the pick-up in consumption, as will be seen below, while spending on basic necessities has fallen (except among low-income households), partly because these goods can be replaced by the services offered by the hospitality industry.
The war in Ukraine has fuelled fears of shortages of certain essential inputs for the agrifood sector, as Russia and Ukraine are major players in the global supply of cereals, oils and fertilisers, among other commodities. It is therefore not surprising that, following the outbreak of the conflict, the prices of agricultural commodities rose sharply on international markets. This price hike has been passed on to the production costs of Spain’s agricultural sector, a net importer of fertilisers and animal feed, and is also having an impact on the food prices paid by end consumers. Nevertheless, the most recent developments (agreements to release part of the grain retained in the Black Sea and good harvests in other producing countries) have helped to stabilise agricultural prices and reduce the risk of a global food crisis.
In this issue, we focus on China's commodity stockpiling strategy and the fiscal room for maneuver of the new Trump administration. As for the Spanish economy, which we expect to continue to grow above the eurozone average in 2025, we present new forecasts for the real estate sector, analyze the Treasury's strategy in a context of a reduction in the public deficit and note the improvement in employment stability as a result of the decline in the temporary employment rate.
This winter’s drought has highlighted one of the most important challenges facing Spain’s agrifood sector: improving how water resources are used given the prospect of their availability becoming more limited.
The food price rally has begun to slow, but the cumulative increase since 2019 is significant and expenditure on food now represents a higher percentage of Spanish households’ consumption. The decline in agricultural and energy commodity prices in the international markets relative to their peaks reached in 2022 should help to contain agricultural production costs and thus to further ease the inflationary pressures on food over the coming quarters.
The agrifood sector continues to suffer from the sharp rise in production costs and the impact of the drought. However, the decline in agricultural commodity and energy prices on international markets from the peaks reached in 2022 should help contain agricultural production costs and thereby moderate inflationary pressures on food. Nevertheless, the severe drought that has been affecting the Iberian Peninsula since last year has reduced the yields of a large number of crops such as cereals and fruits, impacting both prices (up) and the volume of exports (down). All in all, in value terms agrifood exports continued to grow at a good rate in S1 2023 due to the rise in prices, reflecting the high competitiveness of Spain’s agrifood sector despite the adverse conditions.