The Economic Studies Service of Castilla y León del Ecova has presented the Economic Observatory of the region corresponding to the second quarter of the year, which highlights “the high costs of labor and the enormous public expenditure” as causes that could slow down the growth of the economy in the Community, which currently maintains a “stable” trend, with a “modest” growth, and which places the region “above the European trend.”
According to the director of ECOVA Estudios, Juan Carlos de Margarida, in statements reported by Europa Press, “the economy of Castilla y León and Spain continues to grow”, against the European trend, “thanks to exports and consumption with ups and downs of the homes of the inhabitants of Castilla y León”. The GDP of Castilla y León increases by 3.6%
“The current situation conveys tranquility and optimism in the economic field, but it is confronted an uncertain and worrying reality with many open fronts”stressed De Margarida, who placed the geopolitical context as “one of the risks that must be kept in mind” for the second half of 2024.
In this sense, “tensions in Ukraine and Gaza, as well as US-China trade tensions; the instability of the financial markets or the reality of the impact of the Next Generation Funds in Spain and the region”, the consequences of which could push the current economic scenario of “moderate growth, towards the opposite effect”, according to De Margarida.
Similarly, the director of Ecova Estudios argued that “inflation is still high that it is absolutely necessary to reduce it further and maintain it over time”, because price stability “will help grow the economy and protect jobs, allowing citizens to have confidence that their money will be worth roughly the same tomorrow as it is today”.
“Decreased competitiveness”
Regarding the reality of companies in the Community, De Margarida highlighted “the increase in costs and taxes they have to face”, keep businesses “stifled”which represents “a decrease in its competitiveness”, since, as De Margarida pointed out, “there continues to be a lack of confidence among businessmen that has caused very low investment.”
On the other hand, the Observatory shows a series of positive variables, among which are exports, in which the region achieved a turnover of 9.240 million euros during the first half of 2024.
In addition to exports, Ecova Estudios points out that the “predictable drop in interest rates” will facilitate financing for companies and citizens and stimulate regional economic activity, in addition to the predictable recovery of the European economy in the second half of the year. . this “will stimulate exports of goods”, although it warned that there is still “a housing deficit that should stimulate activity in the sector”.
Regarding the household economy, De Margarida perceives “a certain nervousness in homes of the Community”, which can cause “a decrease in consumption and therefore economic growth in Castilla y León”, to which he added that “the high public debt makes the State and the autonomies very vulnerable, which causes a moderation of the growth rate.”
“In the second half of the year there will be a contained weakening of the regional economy, even if it continues to grow,” warned the president of Ecova Estudios, who warns that among the causes that will weaken the community economy are “the sharp increase in the cost of labor, the strong duality of the labor market, the decline in productivity and competitiveness, the withdrawal of investments, the lack of preparation of workers for paradigm changes or even the growing legal insecurity.”
With all this, Margarida affirmed that the reality of Castilla y León “transmits tranquility and optimism in the economic fieldor, but which is faced with an uncertain and worrying reality, with many open fronts at the international, national and regional levels,” stressed Juan Carlos De Margarida.
For all these reasons, the Observatory concludes that “the economy of Castilla y León and Spain continues to grow, contrary to the European trend, thanks to exports”, while emphasizing that “citizens can end the year with a strong dose of uncertainty and distrust in the face of a possible slowdown in economic activity.
“You cannot wait to see how the economy evolves and react when it is too late, much less manage a country or region based on arbitrary decisions that do not help at all and that hinder and distort reality,” said the president of Ecovaestudios, Juan Carlos De Margarida.
