The Independent Authority for Fiscal Responsibility (AIReF) endorses and considers the forecasts for 2023 presented by Andalusia and Castile and Leon feasible. The macroeconomic forecasts of these two Autonomous Regions are made against a backdrop of uncertainty that complicates their assessment at a national level, but heightens them at a territorial level, since the latest information available on Spanish Regional Accounts is the benchmark for the year 2020 and is not in line with the information for the country as a whole following the statistical revisions made last September. Although the forecasts for the two Regions are higher than AIReF’s forecasts, they fall within the range of estimates of the consensus of analysts and are lower than those provided for in the macroeconomic outlook that accompanies the General State Budget.
The macroeconomic forecasts of these two Autonomous Regions are made against a backdrop in which the materialisation of numerous macroeconomic risks identified by AIReF since the end of 2021, and particularly over the course of 2022, will impact the economic outlook of the European Union and Spain in the coming years. Specifically, AIReF indicates the risks surrounding the energy crisis, the persistence of inflation and the tightening of financing conditions.
Andalusia
According to the macroeconomic scenario of Andalusia, regional GDP could grow by 4.3% in 2022. This forecast falls with the range of forecasts available by other private bodies and institutions, although it is optimistic compared with AIReF’s estimate. For 2023, Andalusia estimates GDP growth in volume terms of 1.9%, a rate that is higher than AIReF’s estimate of 1.1%, but within the range of estimates made by other bodies. Furthermore, this is lower than the estimate provided for in the macroeconomic outlook that accompanies the General State Budget. Andalusia has made estimates of the GDP deflator of 4.5%, practically in line with AIReF’s estimate. Consequently, the differences in the Region’s nominal GDP estimates are exclusively down to the differences in the estimates of real growth. Taking this all into consideration, AIReF considers that the forecasts for 2023 presented by Andalusia are feasible and, as such, endorses them.
Given the importance of medium-term planning, AIReF stresses that it would be desirable to include a macroeconomic scenario that covers a longer period than the general annual budget.
AIReF underlines that Andalusia complies with the recommendation to submit the information on the macroeconomic forecasts and corresponding request for endorsement, prior to the publication of the draft budget. Furthermore, the Region has followed the advice on good practices to include a comparison with other independent forecasts and to provide detailed information on the econometric techniques, models and parameters and on the assumptions used therein. As with the other Autonomous Regions that have received a report on their macroeconomic forecasts, AIReF makes a recommendation to Andalusia to include the assumptions on the macroeconomic impact associated with the Recovery, Transformation and Resilience Plan (RTRP) for the period forecast among the information provided.
Castile and Leon
Castile and Leon estimates that its GDP could grow by 3.3% in 2022, an optimistic forecast that falls at the highest point of the range of forecasts available by other private bodies and institutions, and of AIReF’s estimate. For 2023, Castile and Leon estimates GDP growth in volume terms of 1.6%, a rate that is lower than the estimate provided for in the macroeconomic outlook that accompanies the General State Budget. This estimate is higher than AIReF’s estimate of 0.6%. However, it falls within the range of estimates made by other bodies, although those bodies that have updated their estimates recently have had to lower their forecasts. AIReF considers the forecasts made by Castile and Leon for 2023 to be feasible and, as such, endorses them.
Given the importance of medium-term planning, AIReF stresses that it would be desirable to include a macroeconomic scenario that covers a longer period than the general annual budget. It would also be desirable, to include information of the implicit GDP deflator of the macroeconomic outlook.
AIReF underlines that Castile and Leon complies with the recommendation to submit the information on the macroeconomic forecasts that underpin them and the corresponding request for endorsement, prior to the publication of the draft budget. Furthermore, the Region has followed the advice on good practices to include a comparison with other independent forecasts and to provide detailed information on the econometric techniques, models and parameters and on the assumptions used therein, although it continues to present few details. AIReF makes a recommendation on this matter. It also reiterates the advice on good practice to provide more homogenous information and facilitate a comparison consisting of this Region providing forecast expenditure in terms of Spanish Regional Accounts. As with the other Autonomous Regions that have received a report on their macroeconomic forecasts, AIReF makes a recommendation to Castile and Leon to include the assumptions on the macroeconomic impact associated with the Recovery, Transformation and Resilience Plan (RTRP) for the period forecast, among the information provided.
