Unicaja Banco publishes the latest issue of the report ‘Previsiones Económicas de Castilla y León’ (no. 26/2021)

The Castilla y León economy could grow in 2021 between 3.8 and 5.4%, as reported in the latest issue of ‘Previsiones Econónomicas de Castilla y León’, prepared by Analistas Económicos de Andalucía, research company of Grupo Unicaja Banco

16 JUL 2021

7 Min reading


Unicaja Banco has published the issue number 26 of the quarterly report ‘Previsiones Económicas de Castilla y León’ (Economic Forecasts for Castilla y León), prepared, as in previous editions, by Analistas Económicos de Andalucía. As indicated in the report, in the specific case of Castilla y León, the estimates made by Grupo Unicaja Banco’s research company suggest that the GDP could grow in 2021 by 3.8% in a downside scenario and by 5.4% in the central scenario. An increase of 0.1-0.5% in employment is expected, with the unemployment rate standing between 12.6 and 13.0%.


For 2022, the estimates point to a higher growth of activity and employment. In that sense, the GDP could grow in the year by 4.5-5.8%. With regard to employment, an increase ranging from 1.1 to 1.4% is expected, with the unemployment rate standing between 11.9% and 12.5%.


The economic activity has been showing a gradual strengthening at a global scale, and this is reflected in an upward revision of the growth forecasts for 2021 and 2022 and published by the main international institutions.


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 backdrop. The second section analyses the situation of the Castilla y León economy, with special focus on the evolution of the main indicators and on the region’s productive specialization. Finally, the last section includes outlooks on the forecasts on the evolution of the Gross Domestic Product (GDP) and employment in the region for 2021 and 2022.


Global and national economic environment


According to the OECD’s latest report, the global economic prospects have improved, what has resulted in an upward revision of the growth projections for the main economies. World GDP growth is expected to be 5.8% this year and 4.4% in 2022. However, recovery will diverge strongly across countries. The public health strategies, vaccine rollout, adopted economic policy measures and the behavior of sectors that have been severely affected, such as tourism, would explain, to a large extent, differences between countries.



The Spanish economy will be among those with a highest growth in 2021 and 2022, according to the European Commission’s forecasts. In this line, the Bank of Spain expects for this year a GDP growth of 6.2%, in its central scenario, 0.2 p.p. more than in the estimates of March, due to the progress in vaccination rollout, recovery of export markets and the ongoing support of the economic policies, including the Next Generation EU fund programme. GDP growth in 2022 would reach 5.8%, 0.5 p.p. more than in the previous projections, due to the higher estimated impact of the NGEU funds, reaching pre-pandemic levels in the last period of 2022.


Regarding the first data of the year, the Spanish Quarterly National Accounts of the National Statistics Institute (INE, Instituto Nacional de Estadística), reflect that in the first quarter of 2021 the GDP in Spain declined by 0.4%, in line with the Euro Zone (-0.3%). This drop in production would be due mainly to the impact of the third wave of the pandemic, to the reintroduction of virus containment measures and to meteorological disruptions (storm “Filomena”).


Recent evolution of the Castilla y León economy


According to the data from the Quarterly Regional Accounts of Castilla y León, published by Dirección General de Presupuestos y Estadística of the Junta de Castilla y León, in the first quarter of 2021, the regional GDP declined by 1.3% (1.8% growth in the previous quarter). This situation has been due mainly to a worsened health situation (third wave) and to the re-introduction of curbs to contain the pandemic. In y-o-y terms, the GDP fell by 1.1%.

The contribution to the internal demand has been of -1.3 p.p., compared with -4.3 p.p. in the previous quarter, due to the lower decline in consumption expenditure and investment. In y-o-y terms, household expenditure was down 3.7%, where as expenditure in government consumption was up 3.1%. Investment grew by 1.5%. The contribution of the external sector has been 0.2 p.p., with a fall both in exports (-7.9%) and imports (-7.6%) of goods and services.

On the supply side, the decrease has affected most productive sectors, with the exception of energy and agriculture. In y-o-y terms, the added value has decreased in agriculture (-4.7%), construction (-6.5%) and market services (-1.8%), while it has increased in industry (4.1%), especially in energy and non-market services (1.8%).



With regard to the labour market, the data of the Labour Force Survey (EPA) and Social Security contributions reflect a partial recovery of the employment lost since the start of the pandemic, although in the first quarter the year-on-year variations remain negative. At the end of May, 22,079 workers were still on furlough (ERTE schemes) in Castilla y León.


According to the EPA, in the first quarter of 2021, employment in Castilla y León fell by nearly 21,500 people, standing at 955,100. It has to be noted that this figure includes those affected by furlough schemes (ERTE). In year-on-year terms, employment fell by 3.0% (-2.4% in Spain), due mainly to the reduction in the sector of market services (with a reduction of 20,800 employees) and, to a lesser extent, in industry (6,800 less employees). It is also important to note the decrease in the number of employees with a temporary employment contract (27,700 less employees), whereas those with a permanent contract have grown by 7,700. The number of unemployed grew by 4.8%, and the unemployment rate increased 0.8 p.p. to 12.6%.


The numbers of employees contributing to the Social Security scheme stood in May at 910,989, 3.0% (3.8% in Spain) higher than that of the same month of 2020, although the figure remains under pre-pandemic levels.


Economic Outlook for Castilla y León 2021-2022


The forecasts of Analistas Económicos de Andalucía indicate that in 2021, the Castilla y León GDP may grow by 5.4%, in line with the estimates in March forecast, in a context marked by the progress in vaccination rollout and the improvement of the global situation. This growth could be lower (3.8%) in a downside scenario, as uncertainty remains high due mainly to the evolution of the pandemic or consumption.


The number of people in employment is estimated to grow to 969,100 in the year average for 2021, involving a 0.5% year-on-year increase (some 4,500 more). Unemployment could increase by nearly 6.0%, with the unemployment rate standing at 12.6% for the year average (around 0.5 p.p. more than in 2020). In a worst-case scenario, this rate could reach 13.0%, with employment growing by 0.1%.


With regard to growth projections for 2022, the estimates reflect that the Castilla y León economy could post a growth between 4.5% in the downside scenario and 5.8% in the central scenario. The number of people in employment would grow 1.1-1.4%, and the unemployment rate would stand at 11.9% in the central scenario and 12.5% in the worst-case scenario.











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