Unicaja Banco has published the issue number 108 of the report ‘Previsiones Económicas de Andalucía’ (Economic Forecasts for Andalusia), prepared, as in previous editions, by Analistas Económicos de Andalucía.
From this issue onwards, the report will be published every six months. As indicated in the document, according to the Regional Accounts of Andalusia, published by Instituto de Estadística y Cartografía de Andalucía (IECA), in 2021 Andalusia’s Gross Domestic Product (GDP) grew by 5.2% in real terms (5.1% in Spain). According to the data published by the Labour Force Survey, employment grew by 4.3%, with the unemployment rate standing at 20.2% in the last quarter of 2021.
In 2022, the estimations made by Analistas Económicos de Andalucía suggest that the Andalusian GDP could grow by 4.2%. With regard to employment, an increase of 1.5% is expected for the year average, with the unemployment rate standing at 21.1%.
This report is divided into four sections: 1) Economic environment; 2) Recent evolution of the Andalusian economy; and 3) Economic outlook for Andalusia 2022 and 4) Provincial analysis. The first section describes the international and national backdrop and its recent evolution. The second section analyses the situation of the Andalusian economy, with special focus on the evolution of the main indicators, according to the region’s productive structure. The third section includes forecasts on the evolution of the GDP and employment in Andalusia for 2022. Finally, the last section focuses on the analysis of the evolution and economic outlook of the Andalusian provinces.
Global and national economic environment
The international context has changed dramatically with the Russian invasion of Ukraine on 24 February. At the end of last year, the economy was expected to regain momentum as supply conditions continued to normalize and inflationary pressures moderated. However, the invasion will have a significant impact on the economy, which will depend largely on the evolution of the conflict and the impact of economic sanctions.
In a first assessment of this possible impact, the OECD estimates that global economic growth in 2022 will be around 1 percentage point (p.p.) lower as a result of the conflict, with a greater drop in the Euro Zone, while inflation, which was already high at the beginning of the year, could be at least 2.5 p.p. higher. The International Monetary Fund forecasts a global economic growth of 3.6% in 2022 and 2023, i.e. 0.8 and 0.2 p.p. lower, respectively, than in last January forecasts.
The impact of the war will be uneven across countries, and the Spanish economy could be less exposed than others, as it is less dependent on Russian gas and oil. However, the sharp increase in the prices of raw materials and the reduced availability of some of them will affect the different sectors of activity, in addition to the impact of inflation on demand and the effect on exports and tourism of the lower dynamism of our neighboring countries.
The latest data from the Quarterly National Accounts, corresponding to the fourth quarter of 2021, indicate that the Spanish GDP grew by 2.2% (0.3% in the Euro zone), with a year-on-year increase of 5.5% (4.7% in the Eurozone). In the whole 2021, the Spanish economy would have registered a growth of 5.1% (5.3% in the Euro Zone). As for the first quarter of 2022, the Quarterly National Accounts advance estimate indicates that the GDP has registered a quarter-on-quarter increase of 0.3% (0.2% in the Euro Zone), with a decrease in household consumption expenditure. On a year-on-year basis, the GDP increased by 6.4%, with a generalized growth among demand components.
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 fourth quarter of 2021, the GDP has grown by 2.7%, 0.4 p.p. more than in the previous quarter. Compared to the same period of 2021, the GDP has grown by 6.4% (5.5% in Spain), with increases in all the demand components, more significantly in the case of exports (28.1%). On the supply side, the growth responds mainly to the increase in the added value in the services sector (7.9%) and industry (6.0%). On the other hand, construction recorded a 1.0% decrease, with value added in the agricultural sector remaining practically stable.
In 2021 as a whole, the Andalusian GDP registered a growth of 5.2% (5.1% in Spain). Only construction and artistic activities experienced a decrease with regard to 2020, with added value growing in the rest of the productive branches, with an outstanding growth in commerce, transport and hospitality (14.7%), the activities that suffered the greatest decline in 2020. On the demand side, it is worth highlighting the increase in exports, close to 11%, due to the improvement in both tourism goods and services, as well as in household consumption (5.2%).
Considering the most recent information, related to the first quarter of 2022, the Andalusian GDP grew by 0.1% (0.3% in Spain), around 2.5 p.p. less than in the fourth quarter of 2021, due to the decrease in household consumption expenditure and exports, although investment has also grown at a slower pace. In year-on-year terms, growth stood at 6.8% (6.4% in Spain). On the demand side, exports grew by 28.0%, while private consumption grew by almost 3% and investment rebounded to 5.3%. On the supply side, growth ranges from 0.8% in professional activities to 19.5% in commerce, transport and hospitality.
With regard to the labor market, employment continued to show a significant growth rate in the final stretch of 2021, considering both the Quarterly Accounts figures and those of the Labor Force Survey or Social Security contribution, so that the levels prior to the health crisis would have been recovered. In the case of workers under the Social Security scheme, in December (3,253,950 workers) there were almost 78,600 more than in the same month of 2019, which means a growth of around 4% in year-on-year terms (similar to the national average), which has intensified in the first months of 2022 (5.1% in April), although it should be remembered that at the beginning of 2021 the third wave of the pandemic was recorded.
According to the EPA, in the fourth quarter of 2021, employment in Andalusia grew by 5.4% year-on-year (4.3% in Spain). Data for the first quarter of 2022 reflect a decrease of 32,000 in the number of employed persons, most notably in industry and market services. In year-on-year terms, the number of employed grew by 5.4% (4.6% in Spain), due to the increase in construction and services. On the other hand, the number of unemployed decreased by 12.6%, with an increase of 1.4% in the labor force, which brought the unemployment rate to 19.4% (13.6% in Spain).
Economic Outlook for Andalusia 2021-2022
The forecasts of Analistas Económicos de Andalucía indicate that in 2022, the Andalusian GDP could grow by 4.2%, a rate that is similar to the Spanish average and more than 1 p.p. lower than estimated at the beginning of the year. However, there is a high uncertainty, especially with regard to the evolution of the conflict in Ukraine, but also in relation to the trajectory of prices or bottlenecks in supply chains, not to mention the evolution of the pandemic, so that making projections at this time involves a high degree of complexity.
It is also estimated that, on average for 2022, the number of employed persons in the Labor Force Survey could grow by 1.5%, with an increase in employment in non-agricultural activities, especially in services. The number of unemployed could fall by 1.8%, which would bring the unemployment rate to 21.1% on average for the year.
In a breakdown of the analysis by provinces, production would have increased in all provinces in the fourth quarter of 2021. In Malaga (7.1% year-on-year), Almeria (6.8%) and Seville (6.5%), growth would have exceeded the regional average (6.4%).
In 2021 as a whole, production increases above the Andalusian average (5.2%) have been estimated in Almeria (5.6%), Malaga (5.5%) and Seville (5.3%).
The forecasts of Analistas Económicos de Andalucía for 2022 as a whole suggest that economic growth would range from 2.7% in Jaén and 4.9% in Málaga, with the province of Seville (4.4%) also growing above the regional average (4.2%), while Cádiz and Granada would grow at a similar rate to the Andalusian average.