Spain: October 29 floods could knock 0.2 points off GDP growth (central bank)

The economic impact of the deadly floods of 29  ;October in Spain could cost the country up to 0.2 percentage points of GDP growth in the fourth quarter, estimated on Wednesday the governor of the Bank of Spain José Luis Escrivá.

< p>“The estimated impact would be close to -0.2 points on the quarterly growth rate of the fourth quarter and +0.15 points” on inflation, Escrivá said during a meeting with journalists in Madrid, specifying that these estimates were based on what happened in the United States during the passage of Hurricane Katrina, which devastated New Orleans in 2005.

If confirmed, the governor's forecasts would slow down the good dynamics of the Spanish economy, whose GDP grew by 0.8% in the third quarter.

The government expects annual growth of 2.7%, a forecast that has not yet been revised since the floods that killed at least 227 people, according to the latest report, and devastated nearly 80 municipalities near Valencia, Spain's third-largest city with significant industrial activity.

Men in protective suits in a mud-covered street in Paiporta, in the Valencia region, on November 13, 2024 in Spain © AFP – JOSE JORDAN

The cities affected by the floods represent “around 2% of the Spanish economy,” said Mr. Escrivá.

In the affected area there are also many “bedroom towns” where nearly a million people live and where “150,000 effective mortgages” have been counted, the governor added, but “the impact there seems to have been much more limited and more concentrated on industrial activity.”

“The profile” of the disaster is very similar to that of Katrina, explained Mr. Escrivá, specifying that it had not, however, reached the “levels” of the most serious hurricane ever suffered by the United States, where it killed more than 1,800 people.

“From there, using econometric techniques, we concluded that the negative impact on growth, based on historical experience, and seeing that it really has a similar profile, would therefore be about two tenths of the GDP,” he added. argued.

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