Unicaja Banco has published the issue number 8 of its quarterly report ‘Situación económica y perspectivas de las provincias de Castilla y León’ (Economic Situation and Outlook of Castilla y León Provinces), prepared by Analistas Económicos de Andalucía. According to the report, the estimates of Grupo Unicaja Banco’s research company point to a growth in the GDP in all Castilla y León provinces in 2021, at rates ranging from 3.9% in Palencia to 5.5% in Zamora, with growth estimations over the regional average (5.0%) also in Salamanca (5.3%), Soria (5.3%) and Leon (5.1%).
The forecasts for 2022 point to a GDP growth of over 4.0% in all provinces, at rates ranging from 4.1% in Palencia to 5.7% in León.
This report focuses on the analysis of the evolution and economic outlook of each one of the Castilla y León provinces, and it supplements the regional economic forecast report published on 13 January.
The report is divided into two sections: the first one describes the international and national economic backdrop and it includes the main features of the recent behavior of the regional economy. And secondly, a comparative is made of the main indicators at a provincial level. This section includes Analistas Económicos de Andalucía outlooks on the evolution of the economic activity in 2021 and for the year and the outlooks for 2022.
Provincial analysis: recent evolution of the main economic indicators
According to the estimate of Analistas Económicos de Andalucía, in the third quarter of 2021, the economic activity would have recorded a general growth compared to the same period of 2020. The GDP increase would have exceeded the regional average (3.0%) in Segovia (3.9%), Zamora (3.7%), Salamanca (3.7%), Soria (3.4%), Leon (3.4%) and Avila (3.3%), although those rates are not strictly comparable.
With regard to employment, according to the figures published by the Labour Force Survey (Encuesta de Población Activa, EPA), in the third quarter of 2021 the number of those in employment in Castilla y León grew by 32,500 people compared to the previous quarter. Employment increased in all provinces.
In year-on-year terms, the occupied population has increased by 26,800 people in Castilla y León, involving a 2.8% growth (4.5% in Spain). By provinces, the growth has been general –except in Valladolid (-3.1%) and Avila (-2.8%)-, and the increase in Leon (7.3%) is to be remarked. It should be reminded that employment figures include those employees under furlough schemes (ERTE), which continue to drop.
With regard to activity by sector, data from the Hotel Occupancy Survey of the National Statistics Institute show a recovery in demand. In year-on-year terms, overnight stays in Castilla y Leon have increased by 51.7% in the period from January to October, registering a general growth in all provinces, more prominent in Leon (75.9%), Burgos, Palencia, Segovia and Salamanca. However, when compared to the same period in 2019, hotel demand continues to be lower in all provinces, both from national and international travelers.
Regarding residential activity, a recovery in demand is seen, with home sales and purchases in Castilla y Leon between January and September 2021 exceeding the numbers of the same period in 2020 (46.3%) and also in 2019 (18.0%), before the outbreak of the pandemic. The growth of sales and purchases has been general in all provinces with respect to the same period in 2020, with the highest year-on-year growth rates in Palencia, Segovia and Soria, with variation rates above 60%. Compared with 2019, all Castilla y León provinces have recovered pre-pandemic levels.
As for foreign demand, exports of goods also show a positive evolution in the year, with the value exported by Castilla y Leon growing by 22.7% compared to the period January-September 2020, and also exceeding the value of exports in the same period of 2019 (5.8%). With respect to 2020, the increase by provinces is general, except in Avila, with rates above 35% in Valladolid. In comparison with the prepandemic figures, the exported value has increased in all provinces but Soria, Avila and Palencia.
In this context, for the whole 2021, the estimates made by Analistas Económicos de Andalucía indicate a growth in the economic activity in all provinces. Growth rates would have exceeded the regional average (5.0%) in Zamora (5.5%), Salamanca (5.3%), Soria (5.3%) and Leon (5.1%).
International, national and regional environment
The first section of the document covers the international and national economic backdrop and the main features of the recent evolution of the regional economy, information already included in the report ‘Previsiones Económicas de Castilla y León’, published on 13 January.
According to the OECD’s latest report, the economic activity continues to recover at a global level, reaching pre-pandemic levels. However, the recovery is uneven by 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 production 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 variation of 2.6% (0.6 p.p.) compared to the previous quarter. 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%.
With regard to the Castilla y Leon economy, and as included in the report of 13 January, according to the latest data from the Quarterly Regional Accounts, published by Dirección General de Prespuestos y Estadística of Junta de Castilla y León, in the third quarter of 2021, the 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%.
The contribution to the internal demand has been of 1.8 p.p. In y-o-y terms, household consumption has increased by 1.2% and government consumption, by 3.9%, whereas investment has grown by 0.1%. The external sector made a positive contribution of 1.2 p.p., with higher increase in exports (11.7%) than in imports (9.5%).
On the supply side, there has been a general increase, with the exception of the agricultural sector (-4.5% y-o-y) and manufacturing industry (-0.7%). The services sector registered the largest growth (4.6%), mainly due to non-market services, and construction grew by 2.2%.
The forecasts of Analistas Económicos de Andalucía indicate that in 2021, the Castilla y León GDP could have grown by 5.0%. With regard to demand, household 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 indicated in the recently published report ‘Previsiones Económicas de Castilla y León’. As for employment, the number of people in employment is estimated to have grown by 1.2% in the year average, with the unemployment rate standing at 11.8%, 0.3 p.p. lower than the 2020 average.
In 2022, the Castila y León economy is expected to intensify its growth rate, reaching 5.3%, in a context of high uncertainty because of factors such as the new virus variants, bottlenecks in production 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 services (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%.
As for employment, the number of people in employment is estimated to grow by 0.8% in the year average, placing the unemployment rate at 12.2%. With regard to growth projections for 2022, the estimates reflect that the regional GDP could grow by 5.4% and employment could increase by c.1.5%.