MADRID: Spain and Portugal outperformed major European economies in 2023, helping to keep the eurozone from falling into recession last year, official data showed on Tuesday (Jan 30).
The Spanish economy expanded by 2.5% last year, preliminary data from national statistics institute INE showed, as the country’s key tourism sector rebounded strongly from years of disruption caused by the pandemic.
In neighbouring Portugal, which also experienced a rebound in tourism, the economy grew by 2.3% as gross domestic product growth picked up pace at the end of last year.
That compared to 0.9% growth in France and 0.7% in Italy. Germany, the eurozone’s biggest economy, contracted by 0.3%.
“Due to solid growth in Spain and Portugal and another mildly positive surprise from Italy, the eurozone dodged the risk of technical recession late last year,” Berenberg chief economist Holger Schmieding wrote in a statement.
Socialist Prime Minister Pedro Sanchez said the 2023 growth figure “exceeded all expectations”, adding on X, formerly Twitter, that it “demonstrates it is possible to combine economic growth, job creation and measures to protect citizens and companies”.
His government had forecast growth of 2.4% while the Paris-based Organisation for Economic Cooperation and Development (OECD) forecast an expansion of 2.3%.
Spain, the world’s second-most visited country after France, welcomed a record number of foreign tourists last year, over 84 million, a 19% jump from 2022 as the sector rebounded strongly from years of disruption caused by the pandemic.
Tourism is crucial for the domestic economy, making up 12.8% of gross domestic product in 2023.
The Spanish government has also ramped up social spending to help households cope with soaring prices in 2022 after Russia’s invasion of Ukraine sent consumer prices soaring, introducing measures such as discounts on urban travel and sales tax cuts on food that helped buoy consumer spending.
“The Spanish economy has shown itself to be much more resilient than in the past,” Pedro Aznar, an economics professor at the Esade business school told AFP.
But he cautioned there are “clouds on the horizon”, such as the need to reduce public spending and a fall in worker productivity.
The Spanish government has pledged to bring the budget deficit to the equivalent to 3% percent of gross domestic product in 2024 – within EU limits – from 3.9% that it estimates it stood at last year.
Portugal is also facing headwinds with the country facing an early general election on March 10 which opinion polls suggest will result in a fractured parliament.
“The formation of a stable government will be difficult following the March general election,” said economist Pedro Braz Teixeira who heads the research department of business group Forum for Competitiveness.
It forecasts Portuguese economic growth will slow in 2024 to between 0.9% and 1.3%. – AFP
