STORY: Spanish economy needs to diversify sources of growth: economist
SHOOTING TIME: June 28, 2024
DATELINE: June 30, 2024
LENGTH: 00:02:16
LOCATION: BARCELONA, Spain
CATEGORY: ECONOMY

SHOTLIST:
1. SOUNDBITE (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University

STORYLINE:

Since the end of the COVID pandemic, Spain's economy has been expanding thanks largely to the recovery of its tourism sector. 

However, the country should now focus on diversifying its sources of growth by, for example, investing more in renewable energies, artificial intelligence (AI) and education, Sergi Basco, associate professor of economics at Barcelona University, told Xinhua in an interview on Friday.

SOUNDBITE 1 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"In 2022, 2023, the economy grew a lot after the period of Covid when there was an explosion in external demand, in particular tourism. But now that external demand is reaching a plateau and is stagnating, which means (we must) find other sources of growth."

SOUNDBITE 2 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"Unlike countries such as Germany, Spain has a lot of sunny hours, so it should invest in solar power and produce renewable energy that it can sell to other countries. There are industries here that can be promoted instead of tourism, which is reaching its limit."

Although Spain's economy grew by 0.8 percent in the first three months of this year, almost tripling the Eurozone average of 0.3 percent, Basco warns it grew "for the wrong reasons," including tourism and investments by the government, "which is still spending the European recovery funds."

SOUNDBITE 3 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"The Spanish economy is growing for the wrong reasons, and there are two important factors, one is external demand, basically tourism, and the other is the government, which is still spending the European recovery funds."

GDP growth for 2025 and 2026 is projected to shrink to 1.8 percent because the tourism dividend and the special European funds are running out, Basco noted.

SOUNDBITE 4 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"The forecast is that GDP growth for 2025 and 2026 will decline and will be lower than this year. One reason is that tourism cannot grow much more and will be limited and the other reason is that the European funds that the government received are running out."

This, he said, is very low, but the decline could be reversed by shifting focus to such areas as renewable energy and AI and investing more in education. 

SOUNDBITE 5 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"The forecasts say that in two years Spain's potential for economic growth will fall to 1.8 percent, which is very low. What Spain should try to do is to become more productive rather than growing thanks to external demand."

Investing in education and making efforts to reverse recent trends that show falling grades in Spanish schools, particularly in mathematics, will ensure that young people will be better prepared to work in new industries, "meaning that when they enter the job market they will be more productive," Basco said.

SOUNDBITE 6 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"What Spain needs to do is to try to raise productivity in the country in order to raise productivity per hour worked and something that could be done to begin helping that is to improve the education system."

He also said he expects companies -- both foreign and Spanish ones -- to play a key role in boosting the level of productivity through investing in new business projects throughout the country.

SOUNDBITE 7 (Catalan): SERGI BASCO, Associate professor of economics at Barcelona University
"First, what's required is stable government, because if the politics are unstable, then companies feel uncertainty and do not want to invest."

Xinhua News Agency correspondents reporting from Barcelona, Spain.
(XHTV)