Page 8 - economic report 2021

The economic recovery in 2021 was reflected in the positive trend in the great majority of
indicators of activity and demand. In particular, the recorded increases in visitors, electricity
consumption, bank lending, imports, the number of establishments and car and industrial vehicle
registrations are notable. Equally, the operating costs and real investment of the government as
a whole increased, after the cuts implemented in 2020. This economic momentum also led to
an improvement in the situation of the job market, with a 2.4% increase in employment figures,
according to the Workforce Survey, and virtual stabilisation of the unemployment figures.

By sectors, construction is still the most dynamic sector of the economy, with a rate of activity
that has already well exceeded pre-pandemic levels. For their part, industry and non-tourism
services, which were less affected by the health restrictions, have already wholly or almost wholly
normalised activity in relation to 2019. In contrast, the sectors most linked to tourism and most
exposed to social interaction, such as hotels, restaurants, commerce, travel agencies, passenger
transport and culture and leisure activities, recovered more slowly and ended 2021 at activity
levels still far from pre-pandemic figures.

The primary sector, which only provides 0.5% of total GVA, saw contraction in 2021 for the
fourth consecutive year, by 0.6%, which, however, was slower than in 2020 (-4.9%). This decline
was accompanied by a reduction in the number of employees, number of establishments and
heads of livestock. On the other hand, utilised agricultural area increased 1.8%. As for the tobacco
harvest, the trend in 2021 was towards partial recovery, with an increase of 14.6% after two years
in an exceptional situation caused by COVID-19.

Growth in real GVA in the construction sector was 23.5%, a trend that continues a consecutive
six-year period of growth. The strong momentum in activity in the sector is reflected in high
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growth in other indicators, such as approved square metres for building, authorised surface area,
imports of building materials, property transactions, electricity consumption and public investment
expenditure. The results of the Chamber’s surveys corroborate the good performance of activity in
the construction sector, with a very positive evaluation of the business situation, highly concentrated
in the housing segment and with a notable increase in sales figures and investment.

As for industry and manufacturing, the trend in 2021 was also favourable, with real GVA growth
of 6.4%, although the number of employees in the sector fell. Equally, the Chamber’s surveys
depict the improvement in the industrial climate, business activity and production levels, and also
a substantial increase in turnover and the investment rate, contrasting with the declines in 2020.

Services, which was the sector most harmed by the COVID-19 pandemic, saw a partial recovery
in 2021, with real GVA growth of 7.6% after the 8.6% decline recorded in 2020, but not
accompanied by job creation. By subsectors, the recovery in activity was fairly generalised but
at very different intensities. The subsector that suffered most from the consequences of the
health crisis, Commerce, hotels and catering, transport, information and communications, saw
9% GVA growth. This trend is largely linked to the turning point seen in the number of visitors
to the country, which increased 4.1% to 5.4 million, after falling 36.8% in 2020, although the
level achieved is still far from pre-pandemic levels (7-8 million visitors). Along the same line, the
Chamber’s surveys depict an improvement in business opinions on the trend in business activity
in the hotel sector in 2021, with slight increases in turnover and investment.

Commerce followed a similar pattern to tourism, with a slow recovery in activity, evident in
indicators such as the increases in numbers of establishments and electricity consumption,

Introduction