Unicaja Banco has published the fourth issue of the report ‘Previsiones Económicas de Cantabria’ (Economic Forecasts for Cantabria), prepared, as in previous editions, by Analistas Económicos de Andalucía.
This report made by Grupo Unicaja Banco’s research company is divided into three sections: 1) Economic environment; 2) Recent evolution of the Cantabria economy; and 3) Economic outlook for Cantabria 2023 and 2024.
The first section describes the international and national context. The second section analyses the situation of the Cantabria economy, with special focus on the evolution of the main indicators, according to the region’s productive structure. Finally, the third section includes forecasts on the evolution of the GDP and employment in the region for 2023 and 2024.
Global and national economic environment
According to the latest report published by the OECD, the world economy is expected to grow by 3.0% in 2023 and by 2.7% in 2024, in a context of continuing high interest rates, given the persistence of higher-than-expected inflation levels. These forecasts are accompanied by significant downside risks, mainly stemming from a greater-than-expected slowdown in China, the materialization of disruptions in the energy and food markets, and the maintenance of high levels of public debt.
Regarding the Spanish economy, the Quarterly National Accounts (QNA) data, from the INE, for the second quarter of 2023 (after the revision of the Annual Accounts), show that the GDP grew by 0.5%, 0.1 percentage points (pp) below the previous quarter, registering a variation of 2.2% in year-on-year terms. The increase in production in this quarter was due to the contribution of domestic demand, especially that of household consumption and investment in construction.
The latest projections published by the Bank of Spain point to a GDP growth of 2.3% for 2023. Thus, the Spanish economy will be the fastest growing among the main economies of the European Union. In 2024, growth will stand at 1.8%, supported by private consumption and gross fixed capital formation.
Recent evolution of Cantabria economy
According to the data from Cantabria Quarterly Regional Accounts, published by Instituto Cántabro de Estadística (ICANE), in the second quarter of 2023, the GDP recorded a growth of 0.5%, 0.2 pp higher than that of the first quarter. In year-on-year terms, growth stood at 1.2%.
On the demand side, the pace of growth in private consumption is reported to have slowed. Retail sales have registered a better performance up to July than in 2022. On the other hand, industrial production of capital goods would point to a lower dynamism of investment in machinery and equipment, which is also seen in investment in housing, as reflected in sales and purchases.
The value of exports of goods reached 1,776.2 million euros in the first half of 2023, a decrease of 0.4% compared to the same period of the previous year. This decline was largely due to the decrease in the value of semi-manufactured exports (iron and steel, chemicals), which account for nearly 35% of the value exported by the region and fell by 11.4%. In contrast, the value of capital goods exports, which account for about a quarter of the region's exports, increased by more than 10%.
On the supply side, in the second quarter of 2023, the increases in Gross Value Added (GVA) in construction (0.5%) and in the services sector (1.1%) have offset the declines in agriculture and industry (-0.9% and -1.1%, respectively). In year-on-year terms, the growth of the services sector (2.8%) stands out, and within this, the increase in the branches of commerce, transport, hotels and restaurants, information and communications (5.6%), which account for about a third of the services sector and around a quarter of the GVA generated by the Cantabrian economy.
With regard to the labor market, employment growth would have intensified in the first half of the year compared to the second half of 2022, according to data from the Labor Force Survey. Likewise, the number of workers registered with the Social Security would also have registered a slight acceleration in its rate of increase.
According to the Labor Force Survey, in the second quarter of 2023 the number of employed persons stood at 255,800, an increase of 9,100 persons over the previous quarter, supported mainly by market services and, especially, by the trade, transport and hotels and restaurants branch. On a year-on-year basis, employment rose by 1.5%, mainly due to increases in construction and non-market services. The number of unemployed increased by 0.9%, bringing the unemployment rate to 8.1%, very similar to the rate estimated a year earlier.
Economic Outlook for Cantabria 2023 and 2024
The forecasts made by the research company of Grupo Unicaja Banco, indicate that for 2023 as a whole, the regional GDP could grow by 1.5%. As for 2024, the growth rate could stand at 1.4%, in a context of high inflation, high interest rates, weakening international activity and growing geopolitical tensions.
Likewise, it is estimated that, on average in 2023, the number of employed persons (according to the Labor Force Survey figures) will grow by 1.2%, with job creation being sustained by the services and construction sectors. The number of unemployed could fall by 6.6%, which would bring the unemployment rate to 8.7% on average for the year, 0.7 pp lower than in 2022. By 2024, employment growth of 1.0% is forecast, with an estimated unemployment rate of 8.2%.
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