Portada Precyl número 21

Unicaja Banco publishes the latest issue of the report ‘Previsiones Económicas de Castilla y León’ (no. 21/2020)

This report describes the international and national context, and also analyses the situation of Castilla y León economy, paying attention to the hehavior of the main indicators

15 MAY 2020

5 Min reading

 

Unicaja Banco has published the issue number 21 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).

 

     This report is divided into three sections: 1) Economic environment; 2) Recent evolution of the Castilla y León economy; and 3) Economic outlook for Castilla y León 2020-2021. The first section describes the international and national environment. The second section analyses the situation of the Castilla y León economy, paying attention to the behavior of the main indicators and productive sectors. Finally, the last section includes outlooks on the evolution of the Gross Domestic Product (GDP) and employment in Castilla y León for 2020 and 2021. The report also includes three charts which analyze topics of special relevance currently for the Castilla y León economy and society, such as the measures adopted by the central banks, the European Union, the Spanish Government and the Junta de Castilla to mitigate the effects of the health crisis.

 

     The report highlights the following:

 

 

Economic Environment

    

     After the turn of the year, the global economy showed a trend of moderated growth. This pattern has been abruptly interrupted due to the Covid-19 outbreak, which has caused an unprecedented healthcare crisis, with a high cost. The necessary efforts to contain the pandemic have made governments to take extraordinary measures, unprecedented in the recent history (limitation of movement, partial –and even total- shutdown of the productive activity), with a strong impact on production and employment. In this sense, the latest IMF projections suggest that the world GDP could fall by 3.0% in 2020, although a higher impact cannot be ruled out. Recession will be general, with a higher GDP decrease in advanced economies, especially in the Euro Zone.

 

 

    

In the specific case of the Spanish economy, the IMF indicates that it could register an output contraction of 8.0%, and unemployment rate could reach 20.8% in 2020.

 

In this line, the results preview of the Quarterly National Accounts for the first quarter of the year, published by the National Statistics Institute (INE), records a 5.2% fall in production with respect to the previous quarter. Year-on-year, the decrease has been 4.1%. All the productive sectors post falls, especially construction and services, with -9.7% in trade, transport and accommodation and restaurants.

 

 

Recent evolution of the Castilla y León economy

 

The data from the Regional Accounts, related to the fourth quarter of 2019, showed a maintenance of the expansionary profile of the Castilla y León economy, although with moderated rates. This trend has also been abruptly interrupted by the Covid-19. In particular, in the last quarter of 2019 the GDP recorded a year-on-year growth of 1.9%, underpinned, on the demand side, by the growth in investment and private consumption and, on the supply side, underpinned by the increased activity in construction and services.

Therefore, in 2019, the GDP growth would have reached 2.2% (2.9% in 2018), based on the internal demand, although with a slowdown in the growth rate of its components, mainly investment. The external balance contributed negatively to the regional growth.

 

The figures of the Labour Force Survey, referred to the first quarter of the year, reflect only partially the effects of the Covid-19 outbreak. In particular, the number of persons in work is down by 19,600 people with regard to the previous quarter, with a general fall in all the sectors, higher in industry and services (8,000 and 6,400 persons in work less). However, the figures should be interpreted with caution, as the number of persons in work at the end of the quarter which did not work, due to partial shutdown for technical or economic reasons and those who had been furloughed should be taken into account. Additionally, the number of Social Security contributors in March also reflects a decrease close to 30,000 persons compared to February.

 

    

     Economic Outlook for Castilla y León 2020-2021

 

Considering certain hypothesis regarding the duration of the lockdown period and of the ‘de-escalation’ process, Analistas Económicos de Andalucía estimates that, in the whole 2020, the Castilla y León GDP may fall between 7.6 and 10.8%.

 

A significant impact on the employment is also expected, which could fall by 6% in the year average, with a decrease of 59,000 people in work. This way, the unemployment rate would stand at 16.9% (11.6% in the 2019 average), although it could be over 19% if the ‘back to normal’ extends until the end of the year.

 

               For 2021, the first estimates indicate that both output and employment would rise. The Castilla y León economy could grow, in the whole year, by 5.5 to 8.1%. Furthermore, a growth of 2.7% in employment is expected for the year average, what would bring the unemployment rate down to 14.7%, although it could remain close to 17% if the reactivation of the economy takes longer than expected.

  • Institucional

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