Nadia Calviño, Minister of Economic Affairs expects, “with all due caution and prudence,” third quarter GDP growth of 10%, in addition to an improvement in employment data. At the same time, Prime Minister, Pedro Sánchez anticipated that the aid Spain will receive from the EU Recovery Fund (€140 Bn) will add 2 percentage points to the GDP in the long term.
Caixabank Research | In recent years, purchases by foreigners have been fundamental in boosting Spain’s real estate sector, especially in large cities and tourist areas. In 2019, foreigners bought almost 63,000 homes in Spain, accounting for 12.5% of total purchases according to the College of Registrars. We can observe that Q1 sales to foreigners totalled 14,850, down by 6.4% year-on-year. The decline in property purchases by UK citizens (–14%) is particularly large.
Not everything is falling in Spain. Uncertaint y has triggered a surge in savings and according to data from the Bank of Spain (BdE), Spanish household deposits, which rose by 0.08% in July compared to June, amount to € 892.8 billion, up by 7.13% when compared to the same month in 2019.
Talks about transferring more power to the region, which Prime Minister Pedro Sánchez promised in return for the support of Catalonia’s Republican Left, were postponed when COVID-19 broke out in March and have yet to be rescheduled. So do snap regional elections Catalan president Quim Torra called for in January.
Luis Alcaide (Capital Madrid) | Spanish exports increased in June by 29.3% when compared with May and even higher when compared with March. However, in year-on-year terms, foreign sales fell by 9.2% compared with June 2019. We are still far from the figures before the coronavirus hit, but they mark an improvement when compared to the ones of the three months prior to June 2020, the period of confinement. On the other hand, in terms of purchases from the rest of the world, imports are also up on the previous months, confirming a recovery in demand. However, in year-on-year terms, imports fell by 20%. So in this import-export game, Spain’s traditional trade deficit turned into surplus in June.
Madrid Nuevo Norte, the urban development in the north of the capital, received the latest and final approval in July. The project has been in the pipeline for 27 years, and now, coinciding with the health crisis, it is ready to go ahead in early 2021. This is considered the largest urban transformation initiative in Europe over the next decade and is a morale booster for Spain’s depressed construction sector after the strict confinement period.
The labour market figures in July are very good thanks to the reopening of services and the return of tourism to Spain. Unemployment fell by 89,849 people, the first drop since February.The number of people still affected by temporary layoffs schemes (ERTEs) is now just over one million and the Social Security affiliation average membership is still rising. However, only 17% of the jobs destroyed have been recovered.
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.
Boris Johnson’s government will impose a 14-day quarantine on travellers from Spain in response to the surge in reported Covid-19 cases in our country. This decision has fuelled discontent both in the Spanish government and in the tourism sector. This means about 12% of GDP, with the British accounting for 20% of all tourists. Furthermore, the Spanish industry could lose foreign tourism revenues of €8.7 Bn between August and September, reports the Spanish tourist institution Exceltur.
The results of the Labour Force Survey (EPA in its Spanish acronym) for the second quarter of 2020 continue to reflect the situation arising from the pandemic. Employment fell by 1,074,000 persons in this period. It should be borne in mind that this figure does not include those affected by a temporary lay-offs with suspension of employment. Meanwhile, the unemployment figure rose by by 55,000 people, with the unemployment rate standing at 15.33%.