The General Index of Industrial Production (IPI) plunged 6.1% in October compared with a year earlier. This was an increase of more than five percentage points on September’s yearly decline (-0.6%) but seasonally adjusted it recorded a year-on-year fall of 1.6% in October, moderating the September decline by 1.5 points (-3.1%). In monthly terms, and within the adjusted series, the index rose by 0.6%, three tenths of a percentage point less than in September. This growth is well off the double-digit increases recorded in May, June and July.
The Spanish economy has been showing clear signs of structural exhaustion prior to Covid-19. The indicator that summarises this weakness is the stagnation of GDP per capita in relation to the EU average, which has stood at 90% since 2016. This is significantly lower than the 98% reached in 2003, according to a report published by Funcas. The crisis generated by the pandemic hits an economy that was no longer converging with the EU27.
Javier García Arenas (Caixabank Research) | The NGEU European Recovery Fund has a significant budget and could have a major macroeconomic impact on the Spanish economy. The overview of the Recovery Plan presented by Spain reflects the country’s willingness to accelerate investment and outlines a number of relevant areas of action. The specific projects involved and the governance mechanisms for their selection and monitoring are not yet known.
The Spain Food Nation campaign, coordinated by ICEX, will provide market agents with all the necessary information to promote the international marketing of Spanish food as well as to help the sectors most affected by the health crisis and the effects of US tariffs. It will take place in some 20 countries, and will present Spain as a country that supplies safe food to Europe and the world.
Joan Tapia (Barcelona) | The figures of the Spanish economy were terrible in the second quarter. GDP plummeted by an outrageous 18.5% compared to the previous quarter, while the GDP of the euro area, despite suffering the biggest fall since reliable statistics have been available, fell considerably less, by 11.8%. And the loss of jobs in the same period was 7.5% in Spain compared to 2.9% in Europe.
Intermoney | There are important reasons for maintaining a prudent attitude with regard to the Spanish economy, situating its full recovery in the year 2023. This would mean that we would lose more than a decade of the fledgling 21st century. On the other hand, there are also reasons to hope the recovery will eventually take shape and not be too far off. These include the encouraging development of the COVID-19 vaccines, the decisive response from the ECB and the EU, and a lesser impact of the crisis than feared on large European partners and customers.
Fernando G. Urbaneja | Before the pandemic, the Spanish economy showed signs of weakness and exhaustion, which are now considered as pronounced. Spain needs a major modernisation operation to gain productivity, to generate stable employment and add value. And this is not being talked about much. Many decrees but no script, no basic project, no fine print. European funds are important, but knowing how to avoid wasting them, is even more important.
Link Securities | According to preliminary data from the Spanish National Institute of Statistics (INE), the Consumer Price Index (CPI) fell to -1% year-on-year in May (-0.7% in April). The drop reflected the decline in fuel and oil prices, while food prices continued to rise. May inflation has not seen a decline to -1% since 2016. We do not rule out that the entire Eurozone could end up heading into deflation over the coming months, at least those economies most penalized by the pandemic.
Intermoney | What is clear is that the finances of countries like Spain are only sustainable thanks to the ECB’s very important support. And also thanks to the EU’s action which is much better than in the previous crisis. If the German and French Recovery Plan, based on subsidies, is successful, Spain’s need for financing will be lower; in other words, Community transfers would help keep net financing well below the 130 billion euros target.
According to data released yesterday by the Bank of Spain, overall government debt reached 1.224, 243 trillion euros in March. It increased by 22.473 billion euros (+1.9%) from February due to the Covid-19 crisis. So public debt is now at an all-time high and equivalent to 98.3% of 2019 GDP. All organisations highlight in their forecasts that public debt will rise above 100% and set new historical records.