Unicaja Banco publishes the latest issue of its report 'Previsiones Económicas de Castilla y León' (no. 15/2018)

Unicaja Banco has published its issue number 15 of the quarterly report Previsiones Económicas de Castilla y León (Economic Forecast for Castilla y León), prepared, as in previous editions, by Analistas Económicos de Andalucía (research company of Grupo Unicaja).

18 OCT 2018

5 Min reading

As in previous issues, the report is divided into three parts: Economic Environment, Economy of Castilla y León and Provincial Analysis. The first section focuses on the analysis of the international and domestic environment, whereas the second section analyses the recent evolution of the regional economy and its growth forecasts, including production and employment forecasts for the years 2018 and 2019. Finally, an analysis of the economic activity in the nine provinces of Castilla y León is included, with estimations and growth outlooks for 2018.


The report highlights the following:


Economic Environment


The world economy maintains an expansionary profile, although a certain loss of momentum has been noticed in recent months, due mainly to the adoption of protectionist measures in international trade relations and to the existence of geopolitical risks.


In this context, the Spanish economy continued with its growth trend that began in 2013, with year-on-year variation rates in production of around 2.5%. The most recent forecasts point towards a certain slowdown due to a worsened international context and to moderate contribution of the internal demand components.


Economy in Castilla y Léon


With regard to the Autonomous Region of Castilla y León, the GDP recorded, in 2Q 2018, a quarter-on-quarter growth of 1.2%, 0.3 p.p. higher than in the previous quarter. Year-on-year GDP growth stood at 3.4% (2.9% in the first quarter of the year).


This higher growth is due to an improved behaviour of internal demand, whose contribution to the regional GDP amounts to 3.4 p.p. (2.6 p.p. in the previous quarter). Considering its composition, households’ expenditure and Public Administration expenditure grew by 3.0% and 2.8% respectively, with investments increasing by 4.5%. The contribution of the external sector has been zero.


From the point of view of supply, all the sectors registered year-on-year growth in production. The increase in the agricultural sector (12.4%) is to be highlighted, whereas industry and services grew at a rate of 3.1% and 3.3%. The year-on-year growth rate of the construction sector stands at 2.7%.


With regard to labour market, the latest data published by the Spanish Labour Force Survey, related to the second quarter of 2018, indicate that the number of persons in employment in Castilla y Léon grew by 1.1% year-on-year, the first increase recorded since mid-2017. The labour force has decreased by 1.8%, whereas the number of unemployed persons decreased by 18.4%, with the unemployment rate standing at 12.0% (15.3% in Spain), 2.5 p.p. less than in the same period of 2017.


For the whole 2018, Analistas Económicos de Andalucía forecasts a growth of 2.9% in the economy of Castilla y León, 0.3 p.p. higher than June forecasts, due mainly to a higher than expected growth in the services and primary sectors, as well as to a higher contribution of households’ expenditure. On the side of demand, a positive contribution by the private and Public Administration sectors is expected, growing at rates of 2.8% and 1.3% respectively, whereas investment shall go up 4.2%.  On the side of supply, a positive contribution by all sectors is expected, ranging from 1.4% in industry to 8.5% in agriculture. Because of its contribution to the GDP, the expected growth of the services sector (3.1%) should also be mentioned.


As for the labour market, a growth of 1.4% in employment is expected for 2018 as a whole. The industrial sector will see the highest growth (8.3%), whereas in the agricultural and construction sectors could grow at rates higher than 3% (3.2% and 3.4% respectively). The labour force would fall by 1.0%, whereas the decrease in the unemployment rate stands at 15.2%, posting a year average of 12.0%, 2.0 p.p. less than that registered in 2017.


With regard to 2019, the forecasts expect the maintenance of the expansionary phase of the economy, although moderate, with the GDP growth rate standing at 2.4%. On the side of supply, a positive contribution by all sectors is expected, with rates ranging from 1.0% in industry to 2.9% in services. Growth will continue to be based on the internal demand, with an estimate growth of 2.4% for households’ consumption and 1.0% for public consumption, while investments could grow by 3.5%. The growth in employment (1.5%) would be similar to that of 2018, whereas the number of unemployed people would decrease by 14.9%, resulting in an unemployment rate of 10.3% as year average, 1.7 p.p. less than the forecast for the whole 2018.


Provincial Analysis


During the second quarter of 2018, according the estimations of our Activity Systemic Indicator, all provinces would have posted positive growth rates, with year-on-year increases exceeding the regional average in Valladolid (3.6%), Soria (3.6%), Burgos (3.5%) and Salamanca (3.5%). León would have posted an increase in line with the average (3.4%), although these rates are not strictly comparable.


In the whole 2018, the forecasts indicate a general growth in the economic activity, exceeding the regional average in the provinces of Valladolid (3.2%), Soria (3.0%) and Salamanca (3.0%), and similar to the Castilla y León average in León and Burgos (2.8% in both provinces).


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