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Monthly Report | May 2024 | Núm. 489
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COVID-19 is having a huge impact on economic activity in Spain and, in particular, on the tourism industry. At CaixaBank Research we expect GDP to fall by between 13% and 15% in 2020, not returning to its pre-crisis levels until 2023. The outlook in 2020 is even grimmer for Spain's tourism industry as it is one of the sectors hardest hit by the pandemic.
Spain’s tourism sector is in an advantageous position. However, the macroeconomic scenario poses a risk for the trend in tourism activity over the coming quarters.
Just over a month since the start of the war in Iran, uncertainty continues to dominate any assessment of the economic outlook. However, it is necessary to evaluate the impact of this new crisis, a matter to which we dedicate a large part of the articles in the April issue of the Monthly Report. Starting with a map of geoeconomic exposure and strategic relevance of the Middle East, we analyse the situation in the oil market and the energy position in Europe and Spain, and examine the main channels through which it could impact the economy: inflation, trade and finance. On the other hand, we assess the progress with the European Competitiveness Compass and the implementation of the NGEU funds in Spain, and we estimate how the interest rate hikes and cuts between 2022 and 2025 have affected Spaniards’ consumption, based on high-frequency data.
Soft landing in times of political uncertainty and a year of improvement.
After the sharp downturn in the sector caused by the pandemic, the recovery of international tourism in Spain can now be considered almost complete. Among the world’s top 10 tourism destinations, Spain was the second to exceed its number of pre-COVID international tourists, behind only Türkiye.
The first few months of 2019 seem to confirm the positive tone of the sector in Spain, consolidating the excellent inbound tourism figures of recent years. While growth in the number of tourists visiting Spain is slowing down, their expenditure is still increasing significantly. The challenge is how to sustain these trends, redirecting tourism supply towards higher quality segments.
Spain’s tourism sector enjoyed rapid growth in 2024 and has support factors to continue expanding in 2025. These include the economic growth of the main source countries and the sector’s price competitiveness, as it continues to seek a reduction in its seasonality to avoid congestion during the peak season and increase the utilisation of the installed capacity. The good performance of the tourism sector will be key in ensuring that catering continues to enjoy its current level of buoyancy.
The Spanish tourism sector has entered a new phase of more moderate growth following years of strong expansion in the wake of the post-pandemic recovery. In this context, the restaurant industry continues its strong performance in 2025, with solid growth in spending, while US tourism shows signs of slowing down due to economic uncertainty.
Construction costs in Spain have increased considerably since January 2021, a rise that was prompted by the strong recovery in global demand as the economy reopened after the pandemic but was further aggravated by the outbreak of war in Ukraine. In recent months, however, the price of industrial metals on international markets has fallen sharply and the futures markets point to prices stabilising to some extent. Given this situation, the cost of construction materials in Spain is expected to moderate in 2023.
October is the month in which we present the update of our economic forecast scenario. Broadly speaking, the world economy is moving at a higher cruising speed than had been anticipated at the beginning of the year, and the buoyancy of the Spanish economy leads us to revise our growth forecast for 2025 upwards. In addition, in this issue we analyse how Trump 2.0 policies could favour investment flows into the euro area, as well as the relationship between firm size and productivity gaps in the European Union. We also review the recovery of Europe’s tourism sector following the pandemic, we take stock of the summer season for Spain’s tourism sector and we identify which autonomous communities could be the most affected by the US tariff hikes.
In this article we use a novel approach to analyse the potential of Spanish renters who could afford to buy a property. For Spain as a whole, we estimate that around 49% of renters have a high enough income to purchase a home. However, only 13% have the necessary savings. While there are significant differences between provinces and municipalities, in all regions it is clear that insufficient savings capacity is the main constraint faced by renters to buying their own home.
The supply of housing continues to be insufficient to absorb demand, which continues to grow strongly due to the formation of new households. This housing deficit and the pressure it exerts on prices underscores the need to accelerate the construction of affordable housing.
The Spanish tourism sector is showing great signs of resilience: demand is keeping up with the inflationary environment and growth has surprised very positively in the first half of the year. The second half will be very marked by the summer months, for which we especially expect new positive results. In late 2023 and early 2024, we expect the tone of the sector to change slightly and become less buoyant.
One of the determining factors of the economic scenario is the impact of the ECB’s interest rate hikes on the consumption and investment decisions taken by economic agents. In this article, we examine the financial position of the different branches of Spain’s manufacturing industry in an attempt to determine to what extent they’re exposed to this tightening of financial conditions.
The economic policies implemented during the pandemic have cushioned the impact of the crisis on families’ financial situation. On the one hand, a further fall in household income has been avoided while, on the other, the ECB’s accommodative monetary policy has led to a reduction in debt interest payments. A detailed analysis of the effort required by households to pay off their mortgages, based on CaixaBank’s own internal data, duly reweighted to be representative of the Spanish population, shows that these measures have managed to reduce the mortgage burden during the pandemic for most households, although pockets of vulnerability still remain among low-income households.
The Spanish economy continues to advance at a dynamic pace, maintaining relatively high growth both from a historical perspective and in comparison with most developed economies. On the international stage, the economy is showing resilience as the effects of two major opposing forces – geopolitics and artificial intelligence – fully manifest. The optimism surrounding AI in the US stock market and its comparison with the dot-com bubble is one of the topics analysed this month, as well as the reasons why housing is one of the main concerns of European citizens. In Spain, we also address the Treasury’s funding needs and the relationship between company size or job tenure and wage incomes using anonymised internal data.
Spain’s housing market is in the midst of a phase marked by rising tensions, resulting from a combination of strong demand, insufficient and inelastic supply, and marked regional differences.
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Monthly Report | April 2024 | No. 488
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