The Business Confederation of the Valencian Community (CEV) estimates that the Valencian economy could grow by more than 4% and at levels higher than the average for Spain and the euro zone. This is reflected in its Report on the Economic Situation and Perspectives corresponding to the first quarter of 2022.
Looking to the nearest future, the employers assure that the uncertainty that prevails over the duration of the war and its impact on the energy and raw material markets disturbs the decisions of economic agents and therefore clouds all macroeconomic forecasts. However, from the analysis of the updated data included in the report, as well as the future expectations of the sectoral business organizations of the Valencian Community, it can be inferred that the regional economy will have improved during the second quarter of the year in terms of activity and employment.
The CEV also warns that the high levels of inflation and the expectations of interest rate rises will reduce the dynamism of household consumption, but that at the same time international tourism, investments and European funds will continue to contribute to aggregate growth. Hence, for the year as a whole, in a central scenario with high levels of uncertainty, he estimates that the Community's economy could grow by more than 4% and at levels higher than the Spanish and European average.
The report includes an analysis broken down by subsectors and, in the midst of the tourist campaign, it should be noted that the service sector has accelerated its rate of progress, highlighting the improvement in the hotel industry, as a result of the notable improvement in the health situation.
The hotel industry in the Region has evolved at rates higher than the national average and in April it is only 1.1 percentage points below the levels prior to the crisis.
The report also explains that the trade sector is advancing, although at a slower pace. Tourism continues to progress and is approaching pre-crisis levels of activity. In addition, total spending by international tourists exceeded pre-crisis levels in April (April 2019).
In summary, the CEV determines that the regional economy will have improved during the second quarter of the year in terms of activity and employment. "The high levels of inflation and the expectations of increases in interest rates will reduce the dynamism of household consumption, but international tourism, investments and European funds will continue to contribute to aggregate growth," the employer qualifies.
