Spain| Castile and Leon Economic Outlook 2022

GDP growth in Castile and Leon could slow to 2.9% in 2022 and 2.1% in 2023. The impact of the invasion of Ukraine, the sanctions imposed on Russia and the increase in prices of raw materials and, above all, fuels, are weighing more heavily on growth in the more industrially-oriented regions.

Key points

• Key points:
• BBVA Research estimates point to GDP growth of 4.8% in Castile y León in 2021. The improvement in exports of goods, but above all consumption and the good tone of the affiliation drove the recovery. Employment returned to pre-pandemic levels in the region as a whole, but with heterogeneity. Automotive-related areas lagged behind.
• GDP growth in Castile and Leon could slow down to 2.9% in 2022 and 2.1% in 2023. If these forecasts are met, the Castile and Leon economy could create around 13,800 jobs in the biennium.
• The solution to the bottlenecks limiting the improvement of the automotive sector is delayed by China and Russia. But with the boost from NGEU funds, investment is gaining traction: public works, residential demand, and more recently capital goods production are already accelerating.
• Despite a lower dynamism of activity, and favored by a smaller drop in activity in 2020, GDP per capita in Castile and Leon is expected to recover the pre-crisis level already this year. In 2023, when Spain reaches this milestone, the region could surpass it by 3%.
• Public policies will be key to minimize the effects of the war. The fall in the price of electricity will be important. In the absence of a rent pact, the uneven impact of inflation may increase social unrest. Uncertainty persists about investment linked to the NGEU and spending could leak into higher imports in the face of supply constraints.

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