Unicaja Banco has published the issue number 32 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
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 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 the second quarter of 2023, the region’s GDP recorded a fall of 0.2% compared to the 0.1% increase of the previous quarter, due to the negative contribution of the external balance. In year-on-year terms, growth reached 2.0%.
On the demand side, household consumption growth moderated in the second quarter to 0.7%, year-on-year. The pace of investment growth also slowed to 3.2%. Domestic demand is estimated to have made a positive contribution to growth of 1.8 p.p. The external balance made a positive contribution of 0.2 pp, due to higher growth in exports than in imports.
On the supply side, the decline in GDP in the second quarter was due to the fall in the agricultural and industrial sectors. In year-on-year terms, the growth of value added has been practically general, with the exceptions of the agricultural sector and some branches of the services sector, such as real estate activities.
In the labor market, employment continues to grow, although the rate of increase has slowed. The number of workers under the Social Security scheme has grown by around 1.5% so far this year.
According to the Labour Force Survey, in the second quarter the number of employed persons stood at 1,010,400, an increase of 17,400 persons over the previous quarter, concentrated mainly in the services sector. In year-on-year terms, employment grew by 0.3%, supported mainly by professional activities, construction and industry. The labor force decreased by 1.0% and the number of unemployed fell by 11.9%, bringing the unemployment rate to 9.1%, 1.1 pp lower than a year earlier.
Economic Outlook for Castilla y León 2023 and 2024
The forecasts made by the research company of Grupo Unicaja Banco suggest that GDP in Castilla y León could grow by 1.9% in 2023 as a whole. As for 2024, the growth rate would moderate to 1.6%, in a context of high inflation, high interest rates, weakening international activity and growing geopolitical tensions.
Likewise, the number of employed persons (according to the Labour Force Survey figures) is estimated to grow by 0.5% in the year average, based on the growth in construction mainly. Unemployment would fall by 8% and the unemployment rate would stand at 9.0% for the year average, 0.8 pp lower than in 2022. For 2024, a 0.5% growth in employment is foreseen, with the unemployment rate estimated at 8.5%.
Provincial analysis
In the second quarter, activity would have grown more moderately in all provinces than in the first quarter. According to the estimates of the Synthetic Activity Indicator of Analistas Económicos de Andalucía, in Avila (2.4% year-on-year), Valladolid (2.3%), Palencia (2.3%), Segovia (2.2%) and Salamanca (2.1%) growth would have exceeded the regional average.
For 2023 as a whole, growth above the regional average is estimated in Valladolid (2.2%) and Ávila (2.0%).
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