- Inflation falls to 1.9% and core inflation begins to slow down (5.9%)
- Catalan exports grew by 15.1% year-on-year in the period from January to May, well above growth in the eurozone and the large economies of neighbouring European countries
- The labour market remained dynamic, with unemployment falling to 8.4%, its lowest rate in 15 years
According to the forecast by the Statistical Institute of Catalonia (Idescat) included in the Ministry of Economy and Finance’s report on the economic situation, the Catalan economy grew by 1.8% year-on-year in the second quarter of 2023, at the same rate as Spain as a whole, and at a higher rate than other neighbouring economies including France (0.9%) and Germany (-0.1%). This increase brings growth for the first half of the year to 2.4%, a higher rate than that anticipated some months ago. The primary positive factors are the resilience of the labour market and the dynamism of the foreign sector (as a result of the easing of bottlenecks, increased goods exports, greater business competitiveness and the strong recovery of foreign tourism), in a context of prices levelling off (especially those of energy). The quarter-on-quarter change in Catalan GDP stands at 0.4%, the same rate as for the Spanish economy.
However, the economic backdrop remains subject to major risks, due to the effects of monetary policy, the weak European environment, the behaviour of the financial markets and geopolitical risks (and especially the war in Ukraine).
There are some doubts related to the forecast for quarterly GDP, given that Idescat does not yet have some of the main indicators for economic activity for June for its estimates for GDP for the second quarter. An additional factor is the complexity arising from the valuation of intermediate consumption and deflators, in a context of significant changes in the prices of these inputs and final prices.
By sector, construction remains dynamic, industry continues its positive growth, and services slow down
Looking at each economic sector, the industrial sector improved considerably (2.6% year-on-year), as it continued to benefit from lower production costs, more restrained energy prices and lower levels of supply pressure. The robust growth in the construction sector is also noteworthy (5.2% year-on-year), despite the onset of a slowdown in the real estate market.
Meanwhile, services experienced a faster growth rate than in previous quarters (up 1.3%) due to the moderation in consumption. A slowdown was reported in trade, transport and hotels and restaurants, while professional services and technology services in particular remain dynamic. In cumulative terms until May, arrivals and spending by foreign tourists were increasingly close to pre-pandemic levels (9.6% and 5.7% below the figures for the same period in 2019).
The agricultural sector remains the sector with the most negative trend (-3.3% year-on-year), as a result of the drought, but to a lesser extent than in previous quarters.
Foreign trade in goods continues its sustained growth, more quickly than neighbouring countries
Catalonia’s foreign trade in goods has maintained an upward trend in current values since mid-2022, and this continued in the first five months of 2023. Catalan exports grew by 15.1% year-on-year in the overall period between January and May, well above the rate of growth in the eurozone (3.0%), Germany (3.3%), Italy (4.8%), France (6.7%) and Spain (6.4%).
Strong job creation leads to reduced unemployment despite an increase in the labour force
Employment remained very dynamic during the second quarter of 2023. All the major economic sectors recorded positive year-on-year growth in employment in the second quarter, with the hotel and catering (4.1%) and information technology sectors (7.8%) posting the highest growth.
The rise in employment was considerable (133,000 new employees compared to one year ago). As a result, the strong increase in workforce numbers was absorbed, and the number of unemployed reduced. The unemployment rate fell from 10.4% in the first quarter of 2023 to 8.4% in the second quarter, its lowest level since 2008.
Inflation falls as energy prices remain low, and food prices also begin to slacken
Inflation fell to 1.9% in June, thanks to a fall in energy prices and also due to a base effect, and core inflation showed some signs of a slowdown (5.9%). In individual categories, price rises for food slowed, but remained the major source of inflation (10.0%). However, housing prices fell (-10.8% year-on-year in June), as did those in the transport category, which posted a year-on-year decline in prices of 7.5%.
The full document of the report on the economic situation for the second quarter of 2023 is available on the Ministry of Economy and Finance website
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