Spain and Portugal will outperform major European economies in 2023, helping to avoid last year’s eurozone recession, official data showed on Tuesday.
Spain’s economy expanded by 2.5% last year as the country’s main tourism sector recovered strongly from years of disruption caused by the pandemic, according to preliminary data from national statistics agency INE.
Neighboring Portugal has also experienced a recovery in its tourism industry, with gross domestic product (GDP) growth accelerating late last year, resulting in an economic growth rate of 2.3%.
In contrast, sales in France increased by 0.9% and in Italy by 0.7%. Germany, the eurozone’s largest economy, shrank by 0.3%.
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“Robust growth in Spain and Portugal and another rather positive surprise from Italy helped the eurozone avoid the risk of a technical recession late last year,” Holger Schmieding, chief economist at Berenberg, said in a statement. I did,” he said.
Prime Minister Pedro Sánchez of the Socialist Party said the growth rate in 2023 “exceeded all expectations” and said on X (former Twitter), “It is possible to combine economic growth, job creation, and measures to protect people and businesses. It shows that,” he added.
The Prime Minister’s government had forecast growth of 2.4%, while the Paris-based Organization for Economic Co-operation and Development (OECD) had forecast growth of 2.3%.
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Spain, the world’s second-most visited country after France, welcomed a record 84 million foreign tourists last year, thanks in part to the industry’s strong recovery from years of disruption caused by the pandemic. It increased by 19% from 2022.
Tourism is extremely important to the country’s economy, accounting for 12.8% of gross domestic product in 2023.
In response to the rise in consumer prices due to Russia’s invasion of Ukraine, the Spanish government has strengthened social spending to help households cope with the rise in prices in 2022, including discounts on city travel and consumption tax cuts on food. measures, contributing to boosting consumer spending.
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“The Spanish economy has shown itself to be much more resilient than in the past,” Pedro Aznar, an economics professor at Esade Business School, told AFP.
But he warned that “clouds are gathering”, including the need to cut public spending and lower worker productivity.
The Spanish government has pledged to raise the budget deficit to a level equivalent to 3.0% of gross domestic product (GDP) in 2024, from 3.9% estimated last year, within EU limits.
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Portugal is also facing headwinds, with early elections scheduled for March 10 and opinion polls predicting a split in parliament.
“It will be difficult to form a stable government after the general elections in March,” said economist Pedro Braz Teixeira, head of research at business group Competitiveness Forum.
The report predicts that Portugal’s economic growth rate will slow to between 0.9% and 1.3% in 2024.
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