Unicaja Banco has published the fourth issue of the report ‘Previsiones Económicas de Castilla-La Mancha’ (Economic Forecasts for Castilla-La Mancha), which, as in previous editions, has been prepared 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-La Mancha economy; 3) Economic outlook for Castilla-La Mancha 2023 and 2024 and 4) Provincial analysis.
The first section describes the international and national backdrop. The second section analyses the situation of the Castilla-La Mancha 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-La Mancha 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-La Mancha economy
According to AIReF (Independent Authority for Fiscal Responsibility) estimates, in the second quarter of 2023, Castilla-La Mancha GDP would have grown by 0.4%, a rate similar to that recorded in the first quarter. In year-on-year terms, a 1.6% growth is estimated.
On the demand side, some indicators show signs of moderation, as in the case of car registrations, while retail sales are performing better. On the other hand, industrial production of capital goods has remained stable up to July in year-on-year terms, while investment in housing has shown less dynamism, as reflected in sales and purchases.
The value of exports of goods reached 4,946.1 million euros in the first half of 2023, an increase of 1.4% over the same period of the previous year, which would have been due to the rise in prices. By product, the increase in sales of machinery and mechanical appliances, as well as beverages (wine) stands out, the latter accounting for around one fifth of the national total.
On the supply side, activity would have moderated in the different productive sectors, with growth mainly in services and industry, with a more unfavorable evolution in the case of agriculture.
With regard to the labor market, employment has continued to grow in the first half of the year. In the case of Social Security contribution, since May the number of workers has grown at a rate of over 2%, in year-on-year terms, although the accumulated growth for the year is somewhat lower than this figure.
According to the Labour Force Survey, in the second quarter of 2023, the number of employed persons stood at 890,500, which represents an increase of 25,400 persons compared to the first quarter, sustained, above all, by services. In year-on-year terms, employment rose by 2.3%, with the increase in commerce, transport and hospitality standing out. The number of unemployed decreased by 6.8%, bringing the unemployment rate to 13.0%, 1.1 pp lower than a year earlier.
Economic Outlook for Castilla-La Mancha 2023 and 2024
The forecasts made by Analistas Económicos de Andalucía, a company of Grupo Unicaja Banco, indicate that in 2023 as a whole the regional GDP could grow by 1.9%. As for 2024, the growth rate could remain at 1.9%, in a context of high inflation, high interest rates, weakening international activity and growing geopolitical tensions.
Likewise, it is estimated that, on average for 2023, the number of employed persons (according to the Labour Force Survey figures) will grow by 1.3%, with job creation being based, to a large extent, on the services sector. The number of unemployed could fall by 2.2%, which would bring the unemployment rate to 13.9% on average for the year, 0.4 pp lower than in 2022. For 2024, employment is expected to grow by 1.4%, with an estimated unemployment rate of 13.0%.
Provincial analysis
In a detailed analysis by provinces, in the second quarter of 2023, the activity would have grown more moderately in all provinces than in the first quarter. According to estimates of the Synthetic Indicator of Economic Activity of Analistas Económicos de Andalucía, in Guadalajara (2.0% year-on-year) and Toledo (1.8%) growth would have exceeded the regional average.
As for 2023 as a whole, growth above the regional average is estimated in Guadalajara (2.4%) and Toledo (2.1%).
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