The bullfighting of the Spanish economy causes viruses seen by the Pais

The bullfighting of the Spanish economy causes viruses seen by the Pais

All the effects of Coronavirus on the Spanish economy according to the newspaper El Pais

The coronavirus has pushed the economy into a precipice whose depths are only now beginning to become clear. In the first two weeks of confinement, from 16 to 31 March, activity in Spain plummeted by 34%, compared to the eurozone average of 21%. This major decline is partly explained by the measures taken to contain the spread of the pandemic, which are more severe than those of other European neighbors. Among the major economies of the area only Italy, the first to experience the violence of the covid-19 , has experienced a similar collapse, according to a note published Monday by the Bank of Spain.

The supervisor places the beginning of the rigid confinement on different dates depending on the country: March 22 in Germany, March 17 in France, March 10 in Italy and March 16 in Spain. Berlin, which has adopted the least severe measures among large economies, according to a study by the University of Oxford collected by the Bank of Spain, recorded only a 13% drop in the containment period analyzed in the study. In France the collapse was similar to that of Spain and Italy, 32%, against 21% in the euro area. "In conclusion, although the health crisis is a problem of common origin, its short-term effects have been different in each of the member countries," says the agency.

If attention is extended to every sector of the economy, the asymmetries become more evident. Market services, a category which includes hotels and restaurants and retail trade, were the most affected in the whole euro area, due to the restrictions on circulation and the forced closure of many businesses. Activity in this sector, which represents more than half of the economy of the euro countries, decreased by 26% in the first quarter of the containment period.

The setback was much more severe in Spain, where in just two weeks the drop in activity in the services sector, which has a specific gravity higher than the eurozone average, but slightly lower than that of Italy or the France, reached levels of 50%, a reflection of the strong dependence on tourism and driven by the collapse of the category that groups trade, transport and the hotel sector, which fell by 71%. Also in Italy the decline of this sub-sector has been remarkable, of 61%, against 53% in France and 22% in Germany. The same happened for the activity related to the artistic professions, leisure and personal services, which are of greater importance in Spain (4.7%) compared to the other countries analyzed and to the area average (3, 4%) and that has fallen by 73%. The reading: in addition to the containment measures, the disparities in the tsunami that led to the pandemic for activity reveal the differences in the productive structure, "the export orientation of economies and their participation in global value chains in a context of global crisis ”, summarizes the supervisor.

"It is true that the intensity with which the economy has closed has an impact, but I dare say that what weighs most is the structure of the economy, the production specialization of each country", comments Raymond Torres, director of conjuncture of Funcas . This economist lists some of the weaknesses of the Spanish economy that will make him miss the blow: the high number of temporary workers, who could not be fully absorbed by ERTE, and the size of the companies, which in Spain are in over 95% PMI. "It is easier to bear with medium and large companies than when they are small or very small," he summarizes.

By 2020, the government expects GDP to drop by 9.2%, a drop of 5.2% in the first quarter, according to the performance of the INE, while the Bank of Spain estimates a drop of 9-11, 6%, unless there is a recovery: in this case the blow could exceed 15%. By contrast, the recovery in 2021 will be sustained, with progress exceeding 6.5% of GDP both according to the executive and the supervisor. "For the purpose of confinement there will be a rebound, the real unknown is whether it will be the same in all sectors [he explains that the adjustments in the automotive industry and tourism are among the most worried in Spain] and if there will be falls related to others dynamics, such as an increase in household savings due to uncertainty, "adds Torres. For the second half, when Spain has further limited its movements, Torres expects a bite of 18.8% over twelve months.


The study published yesterday by the Bank of Spain also provides details on the collapse of the business in the first three months of the year as a whole: in Spain and Italy it is where it most recedes; followed by France, a short distance away, and Germany, with a drop of only 2%. Spain is experiencing the biggest regressions in the services sector, France in the construction and non-market services, such as education or health, and Italy in the industry.

Rafael Doménech, head of economic analysis at BBVA Research, says that the data released yesterday by the Bank of Spain are "totally in line with forecasts" and believes that most of this evolution is due to containment measures. “It is true that tourism, one of the sectors most affected by the crisis, weighs more on Spain's GDP than in the EU. But, for example, if the burden of tourism had decreased to that of the EU and increased by the same level as that of industry, the drop in GDP in the first quarter (-5.2%) would have been only about two tenths lower "concluding that" the unknown is now how far this recovery will go, particularly in the case of tourism ".

(Excerpt from the international press review by Epr Comunicazione)

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Sat, 20 Jun 2020 08:20:19 +0000.