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Spain & Portugal

Portugal’s economy grew unexpectedly in the first quarter of 2022, with a GDP increase of 2.6% compared to last year’s fourth quarter and 11.9% versus January-March 2021. Economists are warning against complacency given that the effects of the Ukraine conflict have yet to be felt in full. Nevertheless, the lifting of pandemic restrictions has helped to boost Portugal’s tourism sector and its economy in general, which grew more than any other EU member state in the first three months of 2022. The forecasts are optimistic although much depends on developments in Ukraine.

The tourism sector in Spain has recovered almost to pre-pandemic levels. The rising trend in tourist arrivals and expenditure is fuelling hopes of economic growth over the summer months. Spain’s GDP grew 1.4% in the first quarter of this year but energy costs are increasing and the inflation rate has jumped to an all-time high of 9.8%. Inflation is one of the biggest threats in Spain and has consequences for consumption and investment. Spain has cut its economic growth forecast for 2022 by 2.7 percentage points to 4.3%, mainly due to the Ukraine conflict.

Market participants in Spain are struggling with several influencing factors - including rising energy costs, low availability of material and supply chain difficulties - while the situation in Ukraine is creating further uncertainty. At the same time, there is declining demand for most non-ferrous metals, especially secondary aluminium because of low order levels from the automotive industry. The rising number of COVID cases in China has also led to lower demand.