Unicaja Banco publishes the latest issue of its report 'Previsiones Económicas de Castilla y León' (no. 16/2018)

Unicaja Banco has published its issue number 16 of the quarterly report ‘Previsiones Económicas de Castilla y León’ (Economic Outlook for Castilla y León), prepared, as in previous editions, by Analistas Económicos de Andalucía (research company of Grupo Unicaja).

17 JAN 2019

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 outlook, 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 and 2019.


The report highlights the following:


Economic environment


In 2018, the world economy maintains an expansionary profile, although a certain loss of momentum has been noticed in recent months, due mainly to the partial materialization of some episodes of uncertainty, such as the adoption of protectionist measures in international trade relations and the persistence of geopolitical risks.


In this context, the Spanish economy continues with its growth trend, with year-on-year variation rates in production of around 2.5%. Despite the loss of dynamism, the increase in the activity would be higher than that of the Eurozone, a trend expected to be maintained in 2019, although the most recent forecasts point towards a certain slowdown due to moderate contribution of the internal demand components.


Economy in Castilla y Léon


With regard to Castilla y León, the GDP recorded, in 3Q 2018, a quarter-on-quarter growth of 1.0% (1.2% in 2Q, without correcting seasonality and calendar). Year-on-year GDP growth stood at 3.1%, 0.3 p.p. less than in the second quarter.


Considering its composition, the contribution of the internal demand has been 3.4 p.p. Households’ expenditure grew by 2.8% year-on-year, 0.2 p.p. less than in the previous quarter, whereas Public Administration expenditure and investment grew at rates of 3.2% and 4.7% respectively. The contribution of the external sector has been negative (-0.3 p.p.) due to the fall in exports (-0.2%) and to the increase of imports (0.1%).


From the point of view of supply, the construction sector posted a year-on-year growth higher than in the previous quarter, 2.9% (0.2 p.p. more than in 2Q). All the other sectors registered a certain slowdown in their growth rate. The increase in the agricultural sector (11.7%) is to be highlighted, whereas industry and services grew at a rate of 1.7% and 3.2% respectively.


With regard to the labour market, in the third quarter of 2018, the number of persons in employment in Castilla y Léon grew by 1.0% year-on-year, underpinned by the increase in the agricultural sector (3.8%) and in industry (9.2%). At the same time, the pace of decline of the labour force has slowed to -0.9%, and the number of unemployed persons has decreased by 14.0%, with the unemployment rate standing at 11.3% (14.6% in Spain), 1.7 p.p. less than in the same period of the previous year.


For the whole 2018, and in the absence of the data corresponding to 4Q, Analistas Económicos de Andalucía forecasts a growth of 3.0% in the economy of Castilla y León, 0.1 p.p. more than in September outlook, due to the improved behavior of the internal demand. In this sense, households’ expenditure would grow by 2.9%, 0.4 p.p. more than in 2017, and Public Administration consumption would grow by 1.8% and investment, by 4.6%. On the side of supply, a positive contribution by all sectors is expected, ranging from 1.4% in industry to 11.1% in agriculture.


As for the labour market, a growth of 0.9% in employment is expected, 0.5 p.p. below that expected before. The industrial sector will see the highest growth (9.9% more than the 2017 average), whereas the agricultural and construction sectors could grow at rates lower than 2%. The labour force would fall by 1.2%, whereas the decrease in the unemployment rate would stand at 14.6%, posting a year average of 12.2%, 1.9 p.p. less than that registered in 2017.


For 2019, the outlook expects a GDP increase of 2.3%, 0.1 p.p. less than September estimations. From the side of supply, a positive contribution by all sectors is expected, with rates ranging from 1.0% in industry to 2.8% in services. From the side of demand, a growth of 2.3% in households’ consumption and 1.0% for public consumption is estimated, while investments could grow by 3.2%. The growth in employment would stand at 1.5%, whereas the labour force could fall by 0.5%, resulting in an unemployment rate of 10.4% as year average, 1.8 p.p. less than the forecast for the whole 2018.


Provincial Analysis


According to the estimations of our Activity Synthetic Indicator, during the third quarter of 2018 all provinces in Castilla y León posted positive growth rates. Growth rates in León and Valladolid would have the highest increases (3.5% in both cases), whereas Salamanca (3.1%) and Soria (3.0%) would have posted an increase in line with the regional average, although these rates are not strictly comparable.


For the whole 2018, the forecasts indicate a general growth in the economic activity, exceeding the regional average in the provinces of Valladolid (3.4%) and León (3.1%), and similar to the Castilla y León average in Salamanca and Soria (3.0% in both provinces). The first estimations for 2019 suggest an increase in the activity, although lower than in the previous year. León (2.8%) and Valladolid (2.8%) would post the highest growths, and Salamanca (2.4%), Soria (2.4%) and Segovia (2.3%) would rise in line with the average for Castilla y León.


Download Previsiones Económicas de Castilla y León Nº16/2018

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