Photographer: Angel Garcia/Bloomberg

Trying to Break Up Was Costly for Catalonia

Research now sees it growing slower than Spain’s national average
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Catalonia will continue to count the cost of its drive for independence, according to BBVA Research.

The Madrid-based bank sees the Catalan economy trailing the performance of Spain overall, as indicators point to weakness across the board from job creation to consumer spending. The lender’s research department sees Catalonia, the biggest regional economy, growing 2.1 percent this year compared to a forecast of 2.5 percent for the whole of Spain.

BBVA says political uncertainty pegged to the region’s push for unilateral independence is weighing on growth. The expansion in the first half of 2018 will be below the average over the past three years – with all main economic indicators trailing their estimates before the illegal referendum in October, according to BBVA. 

Catalonia Takes a Hit

Main indicators show the Catalan economy underperforming since its October referendum

Source: BBVA Research

Post-referendum forecasts take into account already released data.

The BBVA predictions come as the Catalan parliament prepares to elect its next regional president with all eyes on ousted leader Carles Puigdemont who insists on taking office from his self-imposed exile in Belgium. Who forms the new administration will be key, according to BBVA. The central government in Madrid has warned Puigdemont can't govern if he's not physically in Spain.

BBVA also slashed its growth forecast for Spain in November, citing the political tensions stemming from referendum. It predicts expansion of 2.5 percent this year, down from 2.8 percent in a previous report. It also trimmed its projection for 2017, forecasting growth of 3.1 percent.

While keeping them unchanged at these lower levels in their latest report, it said the impact on the whole of Spain from the Catalan crisis had been limited.

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