Muhammed Ali Gürtaş
13 October 2017•Update: 14 October 2017
By Burhan Sansarlioglu
ISTANBUL
Catalonia faces increasing economic damage the longer the crisis with Madrid rolls on, analysts told Anadolu Agency on Friday.
The northeastern economic powerhouse, which contributes around of fifth of Spain’s GDP, could see its economic role reduced as investors and businesses move to other parts of Spain.
“Catalans have underestimated the vulnerability of the regional economy,” Holger Schmieding, Berenberg Bank's chief economist, said.
“The decision of CaixaBank and Banco de Sadebell to shift their headquarters to other parts of Spain is just a foretaste of the calamities.”
Banco de Sadebell and CaixaBank are the region’s second and third largest banks respectively. Biotech group Oryzon said it would relocate from Barcelona to Madrid shortly after the Oct. 1 independence referendum, according to the U.K.’s Financial Times newspaper.
Schmieding said the Catalan regional government would have to eventually back down from the stand-off with the central government due to a lack of support from the EU or even within Catalonia itself.
“Catalonia's stand-off from Spain could damage the Catalan economy,” he added.
Although the overwhelming majority of people who voted in the referendum backed independence, just 43 percent of the region’s registered voters cast ballots as many boycotted the poll.
Autonomy suspended
The vote has been declared illegal by Spanish courts and the Madrid government while EU governments such as France have condemned the secessionist movement.
This week, Prime Minister Mariano Rajoy warned the region’s leaders that Catalan autonomy could be suspended under Article 155 of Spain’s constitution if the independence bid was not abandoned by Oct. 19.
“Just imagine what might happen to public services in Catalonia if Spain were to freeze the accounts of the Catalan regional government and all other public institutions,” Schmieding said.
Catalonia’s GDP per capita was €29,576 ($35,082) last year, according to figures compiled by the Turkish Embassy in Madrid, compared to €24,100 ($28,586) for the whole of Spain.
The Catalan economy grew 3.5 percent last year to reach €222.5 billion ($264 billion) and foreign trade increased steadily from €132.7 billion ($157.4 billion) in 2014 to €142.7 billion ($169.3 billion) in 2016.
Although regional unemployment stood at 14.9 percent last year, it still compared favorably with a rate of 20 percent across the country as a whole.
Brian Lawson, global economic and financial consultant at IHS Markit, said the crisis had introduced a large degree of instability in Catalonia.
“There is a clear risk of protests and potential civil disorder as and when Article 155 is applied, especially if the regional government is removed forcibly from office and potentially arrested,” he said.
- Tourism
Catalan President Carles Puigdemont, who governs around 7.5 million people, or 16 percent of the Spanish population, said on Tuesday that the declaration of independence would be put on hold to allow for dialogue and mediation with Rajoy.
However, Madrid seems in no mood to negotiate with those seeking to leave Spain.
“The crisis is not hurting the wider EU economy and has had limited impact on that of Spain,” Lawson said.
“Firms in the region are relocating their headquarters to other parts of Spain.”
The tourism industry in Catalonia had been particularly hard-hit since the start of the crisis.
“Catalan tourism numbers have halved,” he told Anadolu Agency.
Revenue from 18 million tourists amounted to €16.6 billion ($19.7 billion) last year, accounting for 15 percent of the region's total revenue.
However, Lawson added: “Cruise ships are being relocated to other ports such as Valencia and tourist rental bookings in Barcelona are down by 40 percent.”
* Muhammed Ali Gurtas contributed to this report from Ankara.
