seven autonomies will continue without recovering the pre-covid GDP level at the end of the year
At the end of this year marked by the slowdown of the economy and high levels of inflation and interest rates with which the European Central Bank tries to deal with it, seven autonomous communities will still have not yet recovered the levels of growth prior to the Covid pandemic, which meant the practically total stoppage of activity and dealt a severe blow to the service sector in general and tourism in particular. The Foundation of Savings Banks (Funcas) places Extremadura, Catalonia, Castilla y León, Cantabria, Asturias, the Balearic Islands and the Canary Islands in this group.
Funcas, which has presented its economic forecasts for the autonomies on Monday, It also improves its estimate of GDP for the whole of Spain this year to 1.3%, in line with what organizations have also done inside (Bank of Spain) and outside the country (European Commission), due to the review carried out by the National Institute of Statistics of last year’s data. At the end of last year, Navarra, Castilla-La Mancha, Murcia, Aragon and Galicia had already recovered the volume of wealth prior to the outbreak of the health crisis.
They will be joined throughout this financial year by the Basque Country, Madrid, La Rioja, Andalusia and the Valencian Community. The Government of the Community of Madrid assured a few weeks ago that this milestone had already occurred, something that discards Funcas with the information and macroeconomic indicators made public to date. The General Director of Funcas, Carlos Ocaña, explained that these differences are due to the fact that the impact of the Covid was focused on very specific sectors and had a greater incidence in the territories that most depend on them, so that “the land that Each autonomous community has to recover to get to the pre-pandemic level is different”.
Throughout this year the slowdown will be common in all the autonomous regions as a result of the impact of inflation on the purchasing power of families, in a context of global uncertainty and more expensive financial costs due to the tightening of monetary policy . He expectations cut is “patent”, in relation to the consumption of families. In this scenario, the main engine of growth will come, according to Funcas, from the stimulus expected from European funds, as well as from the total normalization of tourist activity.
In the foundation they point out that the tourism pull It should be especially favorable for the Balearic and Canary Islands, as well as to a lesser extent for Andalusia and Galicia. Regarding the effect of European funds, the regions with the greatest presence of the capital goods industry and advanced services to companies are the ones that could benefit the most, as is the case of Catalonia, Madrid, Navarra and the Basque Country.
The difference with the rest is not due to the territorial distribution of the Next Generation, which ensures a relative balance between communities, but to the “potential for taking advantage of these stimuli by the business fabric of the different regions,” says Raymond Torres, director of Funcas situation. Other autonomies, with a strong weight in the automobile sector, also have a significant margin of recovery. Castilla y León and the Valencian Community are located in this group.
Unemployment converges for the first time since the financial crisis
With regard to the unemployment rate, it is expected to moderate in the territories as a whole, although in Madrid and Navarra the average annual rate will still be above the level prior to the pandemic – within which it is two autonomies where unemployment was already at relatively low levels in relation to the rest of the communities. In the medium term, the expansion of employment “could be constrained by the loss of the population of working agea phenomenon especially pronounced in Spain that is becoming depopulated,” they warn from Funcas.
They also confirm that the difference between autonomies with the highest unemployment rates and those with the lowest levels has been reduced after the pandemic, above all because Unemployment has fallen a lot in those that have traditionally always had more unemployment, such as Andalusia, Castilla-La Mancha and Extremadura. This fact is important because it is the first convergence between these autonomous communities in terms of unemployment since the last financial crisis.
