Unicaja Banco has published the issue number 2 of its quarterly report ‘Situación económica y perspectivas de las provincias de Andalucía’ (Economic Situation and Outlook of the Andalusia Provinces), prepared by Analistas Económicos de Andalucía, the research company of Grupo Unicaja Banco. This report focuses on the analysis of the evolution and economic outlook of each one of the Andalusia provinces, and it supplements the regional economic forecast report published on 23 July. The estimations made by Analistas Económicos de Andalucía indicate a strong decrease of the Gross Domestic Product (GDP) in all Andalusia provinces in 2020.
According the said estimations by Analistas Económicos de Andalucía, in the best-case scenario, all provinces would register a decrease of over 9%, and even over 10% in Malaga and Cadiz. In the worst-case scenario, the reduction would be of over 12% in all provinces but Huelva, where it would fall by 11.9%.
The report is divided into three sections: the first section describes the international and national context and it includes the main features of the recent behavior of the Andalusian economy. Secondly, a comparative of the main indicators of the eight Andalusian provinces is made, and finally, the third section includes the evolution of the main economic indicators for each province, as well as the forecasts on the evolution of the Gross Domestic Product (GDP) for 2020.
Provincial analysis: recent evolution of the main economic indicators
According to the estimations made by Analistas Económicos de Andalucía, in the first quarter of 2020¸the GDP would have dropped in all provinces. In Malaga (-5.0%), Cadiz (-4.9%), Jaen (-4.8%) and Cordoba (-4.7%) the decline would have been more pronounced than in the region as a whole (-4.3%), whereas the contraction would have been more moderate in Huelva (-2.3%) and Almeria (-3.0%).
With regard to employment, in the aggregate from January to June 2020, the number of people under the Social Security scheme has decreased by 2.5% year-on-year, with a general drop in all provinces. In Jaen, Cordoba, Malaga and Cadiz, the decrease exceeds the mentioned regional average. In this sense, a more pronounced decline in the contribution to the Social Security scheme is seen in those provinces with a higher weight of the services sector, as it is the case of Malaga.
In the current context, the estimations of Analistas Económicos de Andalucía for the Andalusian provinces indicate a strong drop of the GDP in 2020. In the best-case scenario, the falls in Andalusia could range from 9.1% in Huelva to 10.6% in Malaga. In the worst-case scenario, however, the drops could range from 11.9% in Huelva to 14.7% in Malaga, exceeding 12% in all cases, with the said exception of the province of Huelva.
International, national and regional economic environment
The first section of the document ‘Situación económica y perspectivas de las provincias de Andalucía’ covers the international and national economic context, and the main features of the recent evolution of the regional economy, information included in the report ‘Previsiones Económicas de Andalucía’, published on 23 July.
The coronavirus pandemic has caused the most serious economic recession since World War II, what has made governments and central banks to implement exceptional measures to support the health systems, as well as household income and the productive fabric.
The OECD forecasts that the global economy will fall this year by 6.0%, and even by 7.6% if there is a second outbreak that results in new lockdown measures. The IMF has revised downwards its forecasts, estimating a fall in the global GDP of 4.9%, with a higher concentration for the advanced economies, and, especially, for the Euro Zone.
Within the Euro Zone, the Spanish economy will be one of the European economies to register a higher output shrink in 2020, with a GDP drop of over 10%, according to the estimations made by the main international bodies. The Bank of Spain expects a GDP decline ranging from 9.0%, in an early recovery scenario, to 11.6%, in a gradual recovery scenario, although it does not rule out a higher decrease in a less favourable scenario of ‘slow recovery’ (-15.1%), which would include the possibility of additional strict lockdown measures.
In Andalusia, the latest data from the Quarterly Regional Accounts of Andalusia, related to the first quarter of 2020, published by the Instituto de Estadística y Cartografía de Andalucía (IECA), show a GDP decrease of 4.3% y-o-y, as indicated in the report ‘Previsiones Económicas de Andalucía’, prepared by Analistas Económicos de Andalucía. The internal demand deducted 4.7 p.p. to the regional growth, with a decrease in household consumption (-7.1%) and investment (-6.6%).
According to the data published by IECA, the fall in the Gross Added Value has been general, except in the sections of financial activities and insurances, and of Public Administration, health and education, with an especially remarkable decrease in industry (-9.4%) and construction (-8.3%). Within the services sector (-3.3%), the sharpest drops are found in retail, transports and restaurants and accommodations (-8.8%), which represents a fifth of the Andalusian GDP and nearly 30% of the services sector.
Some of the indicators available for 2Q2020 reflect a certain stabilization from May. In this line, the loss of contribution to the Social Security decreased in May and June, although it records a 5.7% fall year-on-year.
In particular, between April and June, the average number of employees under the Social Security scheme has increased by nearly 32,000, after falling by 177,500 between February and April. Furthermore, between April and June, the number of employees temporarily furloughed due to force majeure has reduced to less than a half, standing at 202,882, according to the figures of the Ministry for Inclusion, Social Security and Migrations, and included in the document ‘Previsiones Económicas de Andalucía’, recently published.
As for the growth forecasts for Andalusia, it is estimated that in 2020 the regional GDP may fall between 9.8 and 13.0%, in line with the expectations for Spain, although a higher impact cannot be ruled out if the health situation worsens, as it was said in the report ‘Previsiones Económicas de Andalucía’. The output recovery would start from the second quarter of the year, and the Andalusian economy is expected to grow, in 2021, by 7.1%-8.2%. However, the high uncertainty makes it extremely complex to make forecasts.