Unicaja Banco has published the issue number 3 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. The estimations made by Analistas Económicos de Andalucía indicate a strong decrease of the Gross Domestic Product (GDP) in all Andalusia provinces in 2020.
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 21 October.
The quarterly report ‘Situación econoómica y perspectivas de las provincias de Andalucía’ remarks that, according to the estimations made by Analistas Económicos de Andalucía, in the best-case scenario, all provinces would register a decrease of over 10.5%, and over 12% in Malaga and Cadiz. In a worst-case scenario, the reduction would be of over 12.5% in all provinces (see chart in page 2).
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 second quarter of 2020¸the economic activity would have dropped in all provinces. In Jaen (-22.6%), Malaga (-22.0%), Cordoba (-21.6%) and Sevilla (-21.0%) the decline would have been more pronounced than in the region as a whole (-20.7%).
With regard to employment, according to the figures published by the Labour Force Survey (Encuesta de Población Activa, EPA), the crisis is having a strong impact. The year-on-year decrease in employment is higher than 5% in six of the eight Andalusian provinces. However, it has to be noted that these employment figures include those workers affected by the furlough schemes (ERTE).
The intensity of the employment adjustment is also reflected in the evolution of the contribution to the Social Security. In the aggregate from January to August, the number of people under the Social Security scheme has decreased by 2.8% year-on-year, and especially in the provinces of Jaen, Malaga, Cordoba and Cadiz.
In the current context, the estimations of Analistas Económicos de Andalucía indicate a strong drop of the GDP in 2020 in all the provinces. In the best-case scenario, the decline could range from 10.7% in Almeria to 12.5% in Malaga. In the worst-case scenario, however, the drops could exceed 12.5% in all provinces, ranging from 12.6% in Almeria to 15.2% in Malaga.
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 21 October.
The global economy has experienced a contraction with no precedents in recent history, as a consequence of the COVID-19 pandemic. According to the OECD estimations, in the first half of the year, the global GDP would have fallen by more than 10% on the end of 2019, affecting especially those economies which have a stronger dependence on tourism and other activities related to the services sector with a higher social interaction, as it is the case of Spain.
After the easing of the measures to contain the pandemic, the economic activity has recovered partially. For the whole 2020, the OECD forecasts that the global GDP will fall by 4.5%, instead of the 6.0% decline estimated in June. This is due mainly to the evolution in China and the USA, which has been better than estimated in the first half of the year.
With regard to the Spanish economy, in the second quarter, the GDP fell by 21.5% year-on-year (-14.7% in the Euro Zone). Household consumption, investments and exports have decreased by more than 25%, according to the Quarterly National Accounts of the National Statistics Institute (INE).
For the whole 2020, the Bank of Spain estimates a GDP drop of 10.5%, which may reach 12.6% in a worst-case scenario. In 2021, the growth rate could reach 7.3% in the most optimistic scenario, and 4.1% in the less optimistic.
As for the Andalusian economy, the report submitted on 21 October indicated that in the second quarter the GDP had decreased by 16.9% q-o-q and -20.7% y-o-y (-4.2% in the first quarter), according to the latest data from the Quarterly Regional Accounts of Andalusia, published by the Instituto de Estadística y Cartografía de Andalucía (IECA). The internal demand deducted 19.3 p.p. to growth, with a sharp decrease in private consumption (-24.3%) and investment (-27.3%). The external balance has deducted 1.4 p.p. to growth, with a higher decrease in exports (-37.7%) than in imports (-31.0%).
Regarding supply, and according to the data published by IECA, included in the mentioned regional report of 21 October, the fall in the Gross Added Value has been general, except in agriculture and, within the services sector, in the sections of financial activities and insurances, and of Public Administration, health and education. The activity has fallen by over 20% in industry, constructions and services. In particular, in the services sector, the decrease in the sections of retail, transportation and hospitality has been close to 50%.
In relation to the growth forecasts for Andalusia, as stated in the recently published report ‘Previsiones Económicas de Andalucía’, Analistas Económicos de Andalucía estimate that in 2020, the regional GDP may fall between 11.7 and 13.9%. A growth of 6.7% -or 5.4% in a worst-case scenario- is expected in 2021. In this sense, it should be noted that uncertainty remains high and that the economic outlook is strongly conditioned to the evolution of the pandemic and the containment measures adopted.