Unicaja Banco has published the issue number 31 of the report ‘Previsiones Económicas de Castilla y León’ (Economic Forecasts for Castilla y León), prepared, as in previous editions, by Analistas Económicos de Andalucía.
The report prepared by the research company of Grupo Unicaja Banco is divided into four sections: 1) Economic environment; 2) Recent evolution of Castilla y León economy; 3) Economic outlook for Castilla y León 2023 and 2024 and 4) Provincial analysis.
The first section describes the international and national context 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, according to the region’s productive structure. The third section includes forecasts on the evolution of the GDP and employment in the region for 2023 and 2024. Finally, the last section focuses on the analysis of the evolution and economic outlook of Castilla y León provinces.
Global and national economic environment
Although the slowdown in global activity for 2023 is confirmed compared to the previous year and inflationary pressures persist, in recent months there has been an improvement in the outlook, which has led the main international economic organizations to revise their projections. Thus, the OECD forecasts that in 2023 the world economy will register growth of 2.6%. On the other hand, despite the moderation in energy prices, the dynamics followed by prices suggest that core inflation will remain high.
In the specific case of the Spanish economy, it grew more than expected in 2022 as a whole, at a rate of 5.5%, with greater intensity in the first part of the year, with a good performance of the labor market. The latest available data, relating to the first quarter of 2023, show a quarter-on-quarter GDP variation of 0.5%, with the foreign sector acting as a support. In year-on-year terms, GDP recorded an increase of 3.8%, with the good performance of exports, especially tourism services, and the contribution of the construction and services sectors, on the supply side, standing out.
The latest projections published by the Bank of Spain point to a GDP increase of 1.6% for 2023, while growth in 2024 is estimated at over 2%.
Recent evolution of Castilla y León economy
According to the latest data from the Quarterly Regional Accounts, published by the Dirección General de Prespuestos, Fondos Europeos y Estadística of Junta de Castilla y León, in 2022, the region’s GDP recorded a growth of 3.4%, 1.6 percentage points (p.p.) lower than that of 2021, recovering pre-pandemic levels. The expansion of activity was based mainly on the contribution of internal demand, with a remarkable growth in consumption expenditure (3.1%). On the supply side, the services sector led the GDP growth, with an increase of 6.6%.
In the first quarter of 2023, the Castilla y León GDP grew by 0.5% quarter-on-quarter, in line with the national average, according to the estimates of AIRef (Independent Authority for Fiscal Responsibility). In year-on-year terms, growth was 2.9% (3.8% in Spain).
With regard to the labor market, according to the information available, employment has continued to grow. Contribution to the Social Security scheme registered a year-on-year growth of 1.7% in the month of April.
Economic Outlook for Castilla y León 2022-2023
The forecasts made by the research company of Grupo Unicaja Banco suggest that GDP in Castilla y León could grow by 1.3% in 2023 as a whole, in line with the national average (1.4%). Likewise, the number of employed persons (according to EPA figures) is estimated to grow by 0.5% in the year average, based on the growth in the non-farming sectors, especially services. Unemployment would fall by 5.9% and the unemployment rate would stand at 9.2% for the year average.
With regard to 2024, the first estimates of Analistas Económicos de Andalucía place the growth rate of the Castilla y León economy at 1.9%, and at 1.1% for the number of employed persons, with an unemployment rate of 8.6% on average for the year.
However, these forecasts are subject to high uncertainty and sources of risk, which may push them downward in terms of economic activity and upward with respect to inflation. Among the main risks are geopolitical tensions from the war in Ukraine, tighter-than-expected financial conditions and persistent upward price dynamics.
In a breakdown of the analysis by provinces, according to the estimates of Analistas Económicos de Andalucía Activity Synthetic Indicator, in the fourth quarter of 2022, the provinces of Salamanca (2.8%), Avila (2.8%) and Leon (2.6%) would have recorded year-on-year growth rates above the regional average (2.5%).
In 2022 as a whole, Salamanca (3.8%), Avila (3.7%), Leon (3.6%) and Segovia (3.6%) would have led growth. For 2023, Analistas Económicos de Andalucía forecasts growth rates range from 0.7% in Zamora to 1.8% in Avila, with the provinces of Soria (1.7%), Burgos (1.6%) and Leon (1.5%) also growing above the regional average (1.3%).