Unicaja Banco has published the issue number 28 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, the estimates made by Grupo Unicaja Banco’s research company suggest that the regional GDP could have grown in 2021 by 5.0%, whereas employment could have increased by 1.2%, with the unemployment rate standing at 11.8%.
In 2022, the GDP is expected to grow by 5.3%. With regard to employment, an increase of 1.1% is expected for the year average, with the unemployment rate standing at 11.4%.
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 2021-2022. The first section describes the international and national backdrop and its recent evolution. 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 structure. Finally, the last section includes estimates on the evolution of the Gross Domestic Product (GDP) and employment in the region for the whole 2021 and forecasts for 2022.
Global and national economic environment
According to the OECD’s Economic Outlook latest report, the economic activity continues to recover at a global level, reaching pre-pandemic levels. However, the recovery is uneven among large geographical areas. In the last months of 2021, the productive and commercial activity has lost momentum due, mainly, to the surge of the omicron variant and to the imbalances arising from tension in global supply chains, as well as to the rise in prices of raw materials and intermediate goods. The OECD estimates that, for the whole 2021, the global economy will have grown by 5.6% and by 4.5% in 2022.
In this context, in the specific case of the Spanish economy, the latest data from the Quarterly National Accounts, corresponding to the third quarter of 2021, indicate that the Spanish GDP registered a quarter-on-quarter variation of 2.6% (0.6 p.p.). This rate is higher than the preliminary figure estimated on October, placing the year-on-year GDP variation at 3.4%.
The moderation in the economic activity in the fourth quarter of the year, compared to the previous months, has made the main international bodies and national research services to make a downwards review of their growth outlooks. The latest macroeconomic projections of the Bank of Spain indicate that the GDP in 2021 could have grown by 4.5%, and that the recovery could accelerate in 2022 to reach 5.4%.
Recent evolution of the Castilla y León economy
According to the latest data from the Quarterly Regional Accounts published by Dirección General de Presupuestos y Estadística de la Junta de Castilla y León, in the third quarter of 2021, the regional GDP has grown by 1.4%, 0.2 p.p. more than in the previous quarter. Compared to the third quarter of 2020, the GDP has grown by 3.0%, although production remains 2.8% below the figure of the fourth quarter of 2019 (-8.5% in Spain, without seasonality and calendar effect).
The contribution of the internal demand has been of 1.8 p.p. In y-o-y terms, household consumption has increased by 1.2% and that of Public Administrations, by 3.9%, whereas investment has recorded a 0.1% growth. The external sector made a positive contribution of 1.2 p.p., due to the higher increase in exports (11.7%) than in imports (9.5%).
On the supply side, there has been a general increase, except for the agricultural sector (-4.5% year-on-year), which posted the highest growth in 2020, and of the manufacturing industry (-0.7%). The largest increase has been seen in the services sector (4.6%), mainly due to market services, and in construction (2.2%).
With regard to the labour market, the data of the Quarterly Accounts and of the Labour Force Survey (EPA) reflect a recovery of the employment in the third quarter of 2021. Likewise, the number of employees contributing to the Social Security scheme (932,744 average in November) exceeds the figure reached in the same month of 2019, although it should be reminded that the said number includes employees on furlough schemes.
According to the EPA, in the third quarter of 2021, employment in Castilla y León grew by 3.4% (32,500 more employees), with a significant increase in the services sector. In year-on-year terms, employment grew by 2.8% (26,800 more employees), with strong increases in the agricultural sector (9.6%) and non-market services (5.5%). Unemployment has fallen in year-on-year terms by 19.6%, and the unemployment rate stands at 10.1% (14.6% in Spain), 2.6 p.p. below the figure of the same quarter of 2020.
Economic Outlook for Castilla y León 2021-2022
The forecasts of Analistas Económicos de Andalucía indicate that in 2021, the regional GDP could have grown by 5.0%. With regard to demand, private consumption and investment would post a growth of 4.8% and 6.7% respectively, whereas, on the supply side, a general increase is expected, except in the agricultural sector (-3.4%), and especially remarkable in industry (6.3%) and services (5.4%).
As for employment, the number of people in employment is estimated to have grown 1.2% in 2021 average. Unemployment would have decreased by 1.7%, and the unemployment rate would stand at 11.8%, 0.3 p.p. below 2020 average.
With regard to growth projections for 2022, the Castilla y León economy is expected to intensify its growth pace, reaching 5.3%, in a context of high uncertainty because of factors such as the new virus variants, bottlenecks in supply chains or the increase in prices and costs.
Private consumption and investment could grow at a higher rate than in 2021, at 5.2% and 6.9% respectively. Additionally, the increase will be general in all the sectors, with higher rates for construction (5.8%) and the services sector (5.6%). The number of people in employment is expected to grow by 1.1% in the year average for 2022, and the unemployment rate would stand at 11.4%, 0.4 p.p. below that estimated for 2021.