The warnings launched by several experts in recent months about the loss of competitiveness of the Euskadi countries compared to the state where confirmed on Thursday by official data published by the quarterly accounts of the Basque Institute of Statistics (Eustat).the Basque economy therefore remains increasingly behind the Spanish GDP, with a gap that rises to 1.6 percentage points in the third quarter due to a sector which, despite showing timid growth in the Basque Country between July and September, continues to be held back by the weakening crisis in Europe.
Tourism and related activities such as hospitality and transport allowed the Spanish economy to grow by 3.4% in the third quarter of the year compared to the same period last year, while in the Basque case only this evolution is an increase by 1.8%, two tenths more than the October forecast.
The latest official data reveals that the pace of growth of the Basque and Spanish economies has decoupled over the course of the year. In this first quarter, the distance between the two presented a favorable gap for the state as a whole equal to 0.4%. In the following three months the crack became wider (1.4%) and data published this Thursday widens it to 1.6%.
the state industry as a whole rebounds to 4.1%, against the timid progress of 0.7% of the Basque industry
Europe’s loss of competitiveness is a warning for Basque sailors, who now have a compass pointing towards the change of the sector, weakened by the strength of North American and Asian giants. While in Spain the weight of industry in relation to GDP is five points lower than that of the Basque Country, the truth is that the state manufacturing sector has shown more than surprising growth throughout this year, with an increase of 4, 1% in this third quarter, compared to the timid 0.7% increase in our community, which translates into a difference of 3.4 points, the largest so far this year.
It was the same Minister of Industry,Energy Transition and Sustainability,Mikel jauregi,who warned a week ago that “we are becoming irrelevant” and urged the sector to renew itself to reduce the gap with China and the United States.
«Greater dynamism»
Going into detail, the great economic engine of Euskadi in these early stages of the year, adds eustat, is undoubtedly the Services sector (2.2%), which in recent months we have seen take the helm of job creation , also in Gipuzkoa, which this year recorded five all-time highs in the number of affiliates. The added value in the construction sector also shows good data with a growth of 1.5% compared to the third quarter of the previous year.One of the characteristics of the third quarter is the upward revision that Eustat made of the sector’s added value in the first half of the year, which now shows “greater dynamism”, although far from the 2023 data (1.8%).
The Basque government emphasizes that this is a “meritorious” industrial achievement given the bad situation in Germany.
The Department of Economy and Finance of the Basque government underlines that this is a “meritorious industrial result” given the difficulties that the sector is going through, especially in the relationship with surrounding countries. “The bad situation that Germany, and to a lesser extent France, are experiencing is influencing the exports of our companies and is leading us to a moderate evolution with uncertainties in the sector.” the Deputy Minister of economy of the Basque Government, Iñaki Ruiz, predicts that this growth will be maintained throughout the year or with a “very small” deviation.
Even so, this diagnosis has many nuances. The evolution of investments in the third quarter, which overall grew by 2% but in the part corresponding to capital goods increased by 2.3%, is a positive figure which suggests that there is a slight enhancement in the company forecasts on demand trend in the medium term, which is why they have begun to invest and prepare to face this future scenario in better conditions.
What are the main factors contributing to the economic disparity between the Basque Contry adn the Spanish economy?
Interview between Time.news Editor (E) and Economic Expert (X)
E: Welcome, and thank you for joining us today to discuss the recent economic data concerning the Basque Country. There have been some concerning trends compared to the Spanish economy. Can you give us an overview of what the data from Eustat reveals?
X: Absolutely, and thank you for having me. The latest figures highlight a significant worry: the Basque economy is struggling to keep pace with the growth experienced in the broader Spanish economy. The gap has now widened to 1.6 percentage points in the third quarter of this year. While the Basque economy grew by a meager 1.8% during this period,Spain soared with 3.4% growth driven largely by robust tourism and related sectors.
E: It sounds like the growth disparity is becoming an increasing concern. To what do you attribute this lag in the Basque economy?
X: Several factors are at play here. Firstly,the Basque Country has a more industrial-focused economic structure,and a lot of its sectors are facing headwinds from the ongoing crisis in Europe,notably in manufacturing and exports.In contrast,the Spanish economy’s reliance on tourism and hospitality has bolstered it significantly,especially post-pandemic,as those sectors normalize and extend their growth.
E: Tourism has clearly played a pivotal role in Spain’s economic recovery. How critical is it for the Basque Country to enhance its tourism sector to close this competitiveness gap?
X: Extremely critical. The Basque Country has beautiful landscapes, rich culture, and a unique gastronomy that could appeal to a broader audience.If it can leverage these attributes to promote tourism effectively, it may not only boost the economy but also create a ripple effect in related sectors, such as hospitality and transportation. Investment in infrastructure and marketing could be game-changers.
E: In terms of government policy, what actions do you think should be taken to enhance competitiveness in the Basque Country?
X: the government could focus on several fronts. First,increasing investment in innovation and technology can enhance productivity across existing industries. Additionally, fostering collaboration between sectors to create synergy between agriculture, industry, and tourism can lead to more sustainable growth.Lastly, promoting vocational training will ensure that the workforce is prepared for emerging sectors and shifts in the economy.
E: As we wrap up, what are your predictions for the Basque economy in the coming months?
X: While I hope to be optimistic, current trends suggest that without strategic changes, the Basque economy may continue to struggle to keep pace with Spain’s growth. Though, if the region prioritizes tourism growth and strengthens its industrial sectors, there is potential for recovery and growth.It really depends on how quickly stakeholders can mobilize resources and focus on innovation.
E: Thank you for your insights on this crucial topic. it seems that addressing these challenges will be key to narrowing that gap with the Spanish economy.
X:** Thank you for having me. It will certainly be captivating to see how these dynamics play out in the coming quarters.