the floods of October 29 could reduce GDP growth by 0.2 points

The economic impact of the deadly floods of October 29 in Spain could cost the country up to 0.2 points of GDP growth in the 4th quarter, the Governor of the Bank of Spain José Luis Escrivá estimated on Wednesday. “The estimated impact would be close to -0.2 points on the quarterly growth rate for the fourth quarter and +0.15 points” on inflation, José Luis 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 they are confirmed, the governor's forecasts would slow down the good momentum of the Spanish economy, whose GDP grew by 0.8% in the third quarter. The government expects annual growth of 2.7%, a forecast which has not yet been revised since the floods which left at least 227 dead, according to a latest report, and devastated nearly 80 municipalities near Valencia. , the third largest city in Spain, with significant industrial activity.

150,000 mortgages

The cities affected by the floods represent “around 2% of the economy” Spanish, said José Luis Escrivá. In the affected area there are also numerous “dormitory towns” where nearly a million people live and where “150,000 effective mortgages” were counted, the governor further clarified but “the impact 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 José Luis 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 around two tenths of GDP”he argued.