Unicaja Banco has published the issue number 4 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 estimates made by the research company of Grupo Unicaja Banco indicate a strong decrease of the Gross Domestic Product (GDP) in all Andalusia provinces in 2020 and a general increase in 2021.
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 13 January.
According to the estimates made by Analistas Económicos de Andalucía, in the best-case scenario, in 2020, all provinces would register a decrease of over 10.5%, and over 12% in Cadiz, Granada and Malaga. In a worst-case scenario, the reduction would be of over 11.0% in all provinces.
The forecasts for 2021 indicate a GDP increase of over 4.0% in all the provinces, ranging from 4.0% in Jane to 8.6% in Malaga. However, in a worst-case scenario, the growth would be under 5.0% in all the provinces.
The report is divided into three sections: the first one describes the international and national economic backdrop 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 and 2021.
Provincial analysis: recent evolution of the main economic indicators
According to the estimates made by Analistas Económicos de Andalucía, in the third quarter of 2020¸the economic activity would have dropped in all provinces, although more moderately than in the previous quarter. In Malaga (-10.1%), Grandda (-9.6%) and Cadiz (-9.0%) the decline would have been more pronounced than in the region as a whole (-8.5%).
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, although the number of those in employment grew in the third quarter in all provinces but Huelva. The growths in Cadiz (30,400 more employees than in 2Q), Malaga (17,800) and Jaen (16,500) are to be remarked. These employment figures include those workers affected by the furlough schemes (ERTE).
However, in year-on-year terms, there is a general drop in employment in all provinces but Cadiz (1.3%). In the other provinces, the falls exceed the regional average (-3.7%): -6.1% in Granada, -5.6% in Sevilla, -4.7% in Malga, -4.3% in Huelva and -4.1% in Almeria.
The impact on employment adjustment is also reflected in the evolution of the contribution to the Social Security. In the aggregate from January to November, the number of people under the Social Security scheme has decreased in the all the region, with drops over the regional average (-2.5%) in Malaga (-4.1%), Jaen (-3.4%), Cordoba (-3.1%) and Cadiz (-2.8%). However, a comparison of November and April figures –when contribution to the Social Security reached its low record- shows that contribution only falls in Huelva and it grows in all the other provinces, and even over the Andalusia average (4.5%) in Jaen, Cordoba, Sevilla, Cadiz and Almeria.
In the current context, the estimates of Analistas Económicos de Andalucía indicate a 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 11% in all provinces, ranging from 11.1% in Almeria to 13.2% in Malaga.
For 2021, the estimates indicate a general growth in GDP, at rates over 4.0% in all provinces, and ranging from 4.0% in Jaen to 8.6% in Malaga, and also over the regional average (6.7%) in Granada and Cadiz. In a worst-case scenario, the projected growth would remain under 5.0%, with rates over the regional average (4.1%) in Malaga, Granada, Sevilla and Cadiz.
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 backdrop, and the main features of the recent evolution of the regional economy, information included in the report ‘Previsiones Económicas de Andalucía’, published on 13 January.
The advances in the production and distribution of COVID-19 vaccines, as well as the start of vaccination, have resulted in an improvement of the global economic prospects, although uncertainty remains high. However, the OECD, in its latest Economic Outlook report, indicates that the activity will remain limited and that social distancing and partial closure of borders are likely to remain in force during the first half of 2021.
Against that backdrop, the OECD forecasts that, in 2021, the global economy will grow by 4.2%, after a similar decline in 2020, although the outlook is subject to a high degree of uncertainty.
Although the impact of the pandemic has been general, there are differences between countries¸ due to factors such as the virus spread, implemented containment measures and the sectorial structure. In that sense, the Spanish economy, highly dependent on tourism and on activities subject to higher social interaction, will be one of the UE economies to record in 2020 a higher decline in production, although it will be among those recording a stronger growth in 2021.
In fact, the latest estimates of the Bank of Spain indicate a GDP drop of 10.7-11.6% in 2020, depending on the scenario. This contraction would be followed by a relatively intense recovery, with estimated growths for 2021 ranging between 4.2 and 8.6%.
With regard to the Andalusian economy, in the third quarter of 2020, the GDP grew by 14.5%, after falling by more than 15% in the previous quarter. The year-on-year variation stands at -8.5% (-19.8% in the second quarter), according to the latest data of the Quarterly Regional Accounts, published by the Instituto de Estadística y Cartografía de Andalucía (IECA). The negative contribution of the internal demand has reduced to -7.6 p.p., with q-o-q growth of over 20% in household consumption and exports of goods and services. In y-o-y terms, household consumption decreased by 9.2%, investments by 15.6% and exports by 20.4%.
From the point of view of supply, and according to the data published by IECA, the third quarter has seen a general growth in Gross Added Value, exceeding 30% in retail, transportation, hospitality and art and leisure activities. However, the added value decreased year-on-year in most sectors, with the exception of public administrations (1.9%), financial and insurance activities (5.6%), and agriculture (6.6%). The drop in art and leisure activities (23.1%), retail, transportation and hospitality (21.9%) and professional activities (17.2%) are to be remarked.
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 12.2%. A growth of 6.7% -or 4.1% in a worst-case scenario- is expected in 2021. In this sense, it should be noted that the growth projections are strongly conditioned by the high uncertainty.