For The Time Being, The Situation In Catalonia Is Only Affecting Catalonia

catalonia efimera

For the time being, Spain’s economy is maintaining its cruising speed and GDP will grow 3.1% this year, according to estimates from AIREF and Funcas. But Catalonia’s progress is visibly slowing, with figures continually being downgraded. This is no surprise given the number of companies which have fled the region and the total lack of investment in the last quarter. That said, before the process, Catalonia was doing better than the average for Spain. It’s from this last quarter that things have become problematical.

FUNCAS estimates that Catalan GDP will advance just 0.5% in this quarter and next year will fall behind the rest of the country and grow 1.7%, much less than the 3.1% forecast for Spain.

I suppose this estimation has been made taking into account a reasonable prediction for the outcome of the elections and their follow-up. In other words, a reduction in the conflict and definitive normalisation.

That is not what I expect, but when making economic forecasts it’s better to keep political passions separate. Otherwise it’s impossible to make estimates.

But, in the end, we can put these figures as a top limit, with the most likely scenario being that things turn out worse. How much worse? Well that depends, but these madmen are once again dreaming about turning everything upside down. To be honest, this is partly the government’s fault because it has not known how to take advantage of implementing a moderately serious Article 155.

Whoever wins the elections, the nightmare will rear its ugly head again, because I don’t see Inés Arrimadas (candidate for centrist party Ciudadanos) as a strong, integral person; I only see someone who believes that everything can be negotiated and solved with democracy.

For the time being, the economy is not a big concern for this troop. They believe that by declaring the Republic, there will be a revival, when probably the reverse will actually be the case. The biggest risk for Spain is financial contagion, via public debt, as suddenly people become suspicious about Spanish bonds due to the uncertainty Catalonia’s debt adds to that of Spain.

Spain is half-asleep as its economy goes full steam ahead. There will be worse times to come.



About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://