Spain | Castile and Leon Economic Outlook 2023

Summary

BBVA Research estimates that Castilla y León would have been one of the few communities to recover pre-pandemic GDP per capita in 2022.

Key points

• Key points:
• In 2022, GDP growth in Castilla y León would have reached 3.6%. The recovery is expected to continue in 2023 and 2024, with gains of 1.4% and 2.8%, respectively. From 2022 to 2024, 17,600 new jobs could be created.
• With this growth, Castilla y León would already have returned to the pre-pandemic level of GDP per capita in 2022, and in 2023 it could recover its GDP level.
• The economy is slowing down, although less than anticipated a few months ago. Household spending will be affected by higher prices, increased uncertainty and the slowdown in employment. But the gradual resolution of bottlenecks and lower energy costs support the recovery of the industrial sector, and in particular the automobile sector.
• Activity will gain traction as NGEU funds are executed and uncertainties affecting households and firms fade.
• The factors that could cause the scenario to deteriorate remain numerous. Geopolitical tension could spread. An increase in COVID cases in China and an eventual return to total confinement policies would put the availability of inputs at risk. The lack of an income pact may lead to inflation remaining elevated. The ECB could overreact.

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