Unicaja Banco publishes the latest issue of the report ‘Previsiones Económicas de Andalucía’ (no. 106/2021)

The Andalusian economy could grow this year by 6,2% and by 6,0% in 2022

28 OCT 2021

6 Min reading

Unicaja Banco has published the issue number 106 of the quarterly report ‘Previsiones Económicas de Andalucía’ (Economic Forecasts for Andalusia), prepared, as in previous editions, by Analistas Económicos de Andalucía. As indicated in the report, the estimates made by Grupo Unicaja Banco’s research company suggest that the GDP could grow in 2021 by 6.2%, whereas employment could grow by 2.7%, with the unemployment rate standing at 22.3%.


For 2022, the estimates point to the maintenance of activity and employment recovery. In that sense, the GDP could grow in the year by 6.0%. With regard to employment, an increase of 1.8% is expected, with the unemployment rate falling to 21.2% in the year average.


This report is divided into three sections: 1) Economic environment; 2) Recent evolution of the Andalusian economy; and 3) Economic outlook for Andalusia 2020-2021. The first section describes the international and national backdrop. The second section analyses the situation of the Andalusian 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 Andalusia for 2021 and 2022.


Global and national economic environment


The economic activity continues to recover at a global scale. According to the OECD’s latest report, the global economy is expected to grow by 5.7% 5.7% this year and by 4.5% in 2022.


The increase in demand has pushed up prices in commodities and food, whereas the disruption to supply chains has added to cost pressures, resulting in inflationary pressures that should eventually fade.


The projections made by the different international bodies indicate that the Spanish economy will be among those with a highest growth in 2021. The Bank of Spain, in its latest projections, expects for this year a GDP growth of 6.3%, and of 5.9% in 2022, an upwards review of 0.1 p.p. However, the National Statistics Institute (INE) has revised downwards the growth of the second quarter, from the 2.8% published in the end of July advance, to 1.1% in September (17.5% year-on-year), which will have an effect on the growth projections made before this publication.


Recent evolution of the Andalusian economy


According to the latest data from the Quarterly Regional Accounts of Andalusia, published by Instituto de Estadística y Cartografía de Andalucía (IECA), in the second quarter of 2021, the regional GDP has grown by 3.6% (0.4% decline in the first quarter). Compared to the second quarter of 2020, the GDP has grown by 18.2%, although production remains 5.7% below the figure of the fourth quarter of 2019 (-8.4% in Spain).


The contribution to the internal demand has been of 21.2 p.p., compared to -2.3 p.p. in the previous quarter. In y-o-y terms, household consumption has increased by 28.6% and investment has grown by 15.3%, despite the slight decrease seen in the second quarter. Expenditure in government consumption has continued to grow (5.8%). The external sector made a negative contribution of -3.0 p.p., with higher increase in imports of goods and services (26.5%) than in exports (22.6%).


On the supply side, there has been a general increase, with the exception of the agricultural sector (-0.5% y-o-y). The growth rates range from 5.4% in financial and insurance activities to 52.2% in trade, transport, accommodation and restaurants, with growths over 20% in industry, professional activities and art, entertainment and other services.


With regard to the labour market, the data of the Regional Accounts and the Labour Force Survey (EPA) reflect a recovery of the employment in the second quarter of the year, where the number of people in employment (3.15 million, according to the EPA) exceeds the levels of late 2019.  Likewise, the number of employees contributing to the Social Security scheme (3,161,806 average in August) exceeds the figure reached in the same month of 2019.


According to the EPA, in the second quarter of 2021, employment in Andalusia grew by 3.4% (102,400 people), thus growing by 8.5% compared to the second quarter of 2020 (the period most affected by the COVID-19 crisis). The improvement in employment figures has been general in all sections, but especially in construction and non-market services, where employment exceeds the levels prior to the pandemic. The number of unemployed people has grown by 10.1% in y-o-y terms, and the unemployment rate stands at 21.6% (15.3% in Spain).


Economic Outlook for Andalusia 2021-2022


The forecasts of Analistas Económicos de Andalucía indicate that in 2021, the Andalusian GDP may grow by 6.2%, 0.3 p.p. more than in June forecast, due to the higher than expected growth in the quarter. With regard to demand, private consumption and investment would post a growth of 9.1% and 6.2% respectively, whereas, on the supply side, a general increase is expected, except in the agricultural sector (-0.9%), and especially remarkable in services (7.1%) and industry (5.4%).


As for employment, the number of people in employment is estimated to grow by 2.7% in the year average, 1 p.p. higher than the previous projections, taking into account the growth in the second quarter, especially in services and construction. The unemployment rate would stand at 22.3%, similar to the rate of 2020.


With regard to growth projections for 2022, the estimates reflect that the Andalusian economy could grow by 6.0%, recovering the production levels that it had before the pandemic in the second half of the year. However, there are still some downward risks.


A more moderate growth in private consumption (5.4%) is estimated for the next year, as well as a higher increase in investment, close to 10%. Additionally, the increase will be general in all the sectors, with higher rates for services (6.8%) and construction (6.1%). The number of people in employment would grow by 1.8% in the year average for 2022, and the unemployment rate would stand at 21.2%.



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