Bankinter | Spain recorded almost 6,000 flights in a week in which operations resumed, up 66.6% compared to the previous week (3,523 landings and takeoffs). Air traffic has shot up in destinations like Palma with a 177.6% rise, while others like Madrid have seen an increase of 32% in operations.
The Bank of Spain has decided to maintain the counter-cyclical capital buffer applicable to credit exposures in Spain at 0% during the third quarter of the year. It will probably also do the same in the coming quarters due to the current context of the coronavirus crisis as the severe macroeconomic and financial impact of the Covid-19 crisis require credit institutions to maintain the flow of financing to the real economy. The aim of the counter-cyclical capital buffer is to reinforce the solvency of the banking system in phases of excessive credit growth.
Juan Pedro Marín Arrese | Spain faces dire prospects according to most estimates, as its crucial tourist sector is taking a heavy toll. Up to now,the Government has struggled to mitigate the ensuing onslaught on employment by financing temporary layoffs and supporting low-income households. Yet, GDP will plunge in 2020 and will probably display a sluggish rcovery in the following couple of years. Lower income levels and a substantial surge in unemployment will sharply cut down demand and output.
Bankia Estudios | None of the world’s major economies will avoid an annual contraction in GDP, with the possible exception of China, which could grow by a modest 1%, reported the institution. As for the Spanish economy, it has cut forecasts from the -8% estimated in April to -12.8%. For 2021, it estimates 6.3% growth , so that next year the level of GDP will still be 7.3% lower than in 2019 (4% in the previous revision). Spain’s worse performance is mainly due to the heavy weighting of tourism sector in GDP.
The new plan will favour the mobilisation of investments worth 90 billion euros and create 107,000-135,000 jobs per year over the next decade. The government maintains that with the orderly development of the sector, 74% of electricity in Spain will be renewable by 2030, reaching 100% by 2050.
Moody’s has warned that over half of Spain’s non-financial companies rated by the credit agency are at risk of being downgraded in the next 18 months. This is in light of the prospect that their solvency will continue to weaken, even after the government relaxes restrictions on mobility and travel and eases social distancing. In fact, the ratings agency highlights that between March and May 2020, it took 29 negative actions on the ratings of Spanish non-financial companies.
Last week the Spanish government presented its Tourism Promotion Plan, to which over 4.250 billion euros will be assigned, mostly in the form of credits. Of the total amount of aid earmarked for the tourism sector, one of the most affected by the coronavirus pandemic, 93%, or almost 4 billion euros, will be granted via loans. A further some 275 million euros will be granted in the form of direct transfers.
Investment funds have €40 billion to spend in the Spanish real estate market in the short and medium term, according to a survey carried out amongst 200 funds and investors by Cushman & Wakefield. Of the total interviewed, 51% expect to maintain their investment strategy in the coming months despite the virus. This compares to 33% who are reconsidering their risk profile and 16% who are evaluating different asset classes.
Bankinter | The US giant NextEra, the world’s largest electricity company by market capitalization, has been victorious in its long, multi-million dollar arbitration process against Spain regarding subsidies’ cuts which took place years ago. The Ciadi, the World Bank’s arbitration body, has lifted the suspension on the execution of the favourable award NextEra obtained a year ago. The award obliges Spain to pay 290M euros in compensation for the damage caused by the cuts decreed in 2014.
The Spanish government is launching a recovery plan to help the sectors most affected by the coronavirus crisis. These include the tourism and automotive industries, which account for 12% and 10% respectively of the country’s GDP. The first of which have been known details is the the Plan for the Promotion of the Automotive Industry Value Chain. It has a budget of €3.750 Bn, of which €1.050 Bn will be earmarked for the renewal of the fleet of vehicles in Spain. The aid will prioritize the most efficient models.