More than 40% of Spanish companies are planning or considering cutting their workforce due to the impact of Covid-19. At the same time, 25% of firms have frozen salaries and 16% are reducing them, according to a survey of nearly 1,000 European organisations, carried out by consultancy group Willis Towers Watson. More than one hundred Spanish companies are included in the survey.
Following the publication of the Financial Stability report, Bank of Spain governor Pablo Hernández de Cos highlights the significant increase in public debt, which will have to be faced once the crisis is over. The governor points out that it will be necessary to implement a medium-term fiscal consolidation programme and implement the necessary structural reforms.
Spain received two million international tourists in March, 64.3% less than year earlier, after its borders were closed from the mid-month to curb the Covid-19 pandemic, according to the Statistics on Tourist Movements at Borders (Frontur). In 2019, Spain clocked up for the seventh consecutive year an all-time record in international tourist arrivals, with 83.7 million visitors. But with borders closed sine die, it seems that only domestic tourism can save the 2020 season.
The Social Security has lost 947,896 affiliates since the beginning of the COVID-19 crisis and up to end-April, leaving the total number of contributors at 18.39 million. Meanwhile unemployment grew in these last two months by more than 585,000 people, exceeding 3.8 million unemployed. The Ministry of Labour has not included the almost 3.5 million Spaniards protected by a situation of total or partial suspension from work via temporary layoffs.
COVID-19 will result in a slowdown in housing transactions of -35% – up to 326.000 transactions in 2020, returning to minimal levels (2012 to 2014). Home buying decisions will be postponed by 6-12 months, and some of the demand will disappear for longer, producing a temporary imbalance between supply and demand.
As expected, the 4% quarterly contraction in the Spanish economy estimated by the consensus of analysts has been overtaken by reality. GDP registered a historical collapse of 5.2% in the first quarter due to the Covid-19 crisis. Until now, the biggest quarterly fall in GDP was in the first quarter of 2009 (-2.6%).
Starting next Monday May 4, the plan contemplates 4 phases, each with a duration of two weeks. The mere announcement of the deconfinement plan is being taken as synonymous with the worst being behind Spain. That said, it has generated certain doubts. For example, the conditions imposed in the initial phases will make it economically unviable to for many businesses to re-open, particularly those linked to the hotel and tourism sector.
Funcas | The sectors most directly affected by the shutdown – retail, hotel accommodation, restaurants, cultural and sporting activities and personal services – account for 15% of GDP alone. And they also have a ‘snowball effect’ on the rest of the sectors equivalent to 6% of GDP, according to our forecasts’ update for 2020 and 2021.
A glimmer of hope in the macro scenario managed by Banco Santander’s Research team. Compared to more somber estimates such as those from the Bank of Spain or BBVA Research, the experts at Santander Corporate & Investment do believe in a V-shaped recovery.Banco Santander’s base scenario envisages a 5.2% fall in Spanish GDP this year compared with 8.3% growth in 2021.
Alicia Arce | Enlightenment is the human being’s emergence from his self-incurred minority, said Kant and that produced an active subject who is responsible, who takes charge of their life, their acts, their share of the world; with their many achievements and their terrible atrocities.