BBVA forecasts that the Basque economy will grow 1.3% this year, one decimal point below the official forecast. According to the EPA (Active Population Survey) for the first quarter of 2011 unemployment in Euskadi stands at around 11.6%, compared to 21.2% inSpainas a whole.

The analysis by BBVA highlights the fact that unemployment in the Basque Country has reacted less to the economic cycle mainly because of the greater stability of the working population, with a higher rate of ageing in the population and a lower influx of migrants. Lower than average levels of short-term contracts and higher than average education levels are also contributory factors.

According to the study, presented inBilbaoby Vicente Mestre, Northern Area Head of BBVA, and Rafael Doménech, Head Economist for Developed Economies of BBVA Research, if growth in the GDP exceeds 1.7%, unemployment in the Basque Country will drop by 0.6 points. By contrast, the turning point beyond which unemployment will drop inSpainas a whole stands at 2.7%

The report acknowledges that in the last phases of expansion the Basque economy showed less imbalance than that ofSpainas a whole, and that it is now “slowly but steadily” resuming positive growth and may already have emerged from the job loss phase. BBVA reports three main distinguishing features that enable the region to be more dynamic in economic terms: a lower oversupply of housing, a lower unemployment rate and a better position in the process of public administration tax consolidation.

Other factors that have influenced the relatively good performance of the Basque economy during the crisis include its greater exposure to foreign markets and its below-average level of leverage in the private sector. However BBVA warns that the gap between the Basque and Spanish economies could narrow this year and in 2010 as internal demand is expected to recover more strongly inSpain.