Macropolis | A video talk featuring Juan Pablo Riesgo, a partner of Ernst & Young and former Secretary of State for Employment in Spain, and Nick Malkoutzis, editor of MacroPolis, discussing how Spain and Greece should best use the Recovery Fund package proposed by the European Commission.
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.
As of today, Telefónica’s 5G network is available in all the autonomous communities, with outstanding hyperconnectivity in European terms as a result of its combination with fibre optics. According to Telefónica chairman José María Álvarez-Pallete “5G will bring huge benefits for Spain. This is a golden opportunity for our country to lead the Fourth Industrial Revolution”. This move will enable 75% of the Spanish population to obtain access to this new technology by the end of the year.
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.
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.
Philippe Waechter (Natixis IM) | Germany and France account for 23-24% of the deterioration in GDP in the euro area, while Italy and Spain are each responsible for around 15%. The remainder of the euro area accounts for 21%. We note that the weighting of Germany’s contribution is lower than the weighting of its contribution to GDP for the euro area. The opposite is true for France and Spain, and this shows the extent of the turmoil in these two countries, particularly Spain.
The economic growth of both economies has fallen sharply in the Q2 of the year due to the coronavirus restriction measures. Germany’s GDP saw a decrease of 11.7% on yoy rate. The country was plunged into the deepest recession in post-war history. On the other side of the Atlantic, the US GDP was down 32.9% in annualised terms, the biggest fall since the current historical series began in 1947. Spain and France accompany them with record contractions of 22,1% and 19%, respectively.
Industrial production in the euro area chalked up a record rise of 12.4% in May, after falls of 18.2% in April and 11.8% in March. However, the figure was still 20.9% below the level recorded in May 2019, according to data published by the EU’s statistics office Eurostat. In the case of Spain, industrial production rebounded 15.1% in May after declines of 22.8% in April and 13.5% in March. The figure was still 24.9% lower than in May 2019.
BofA Global Research | We stay overweight France, Spain and Italy, as they should benefit from a continued rebound in PMIs. We raise the UK to marketweight after the recent undershoot. We remain marketweight Germany, as it discounts much good news. We are underweight Switzerland, as it tends to underperform when improving growth momentum lifts bond yields.