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.
José Ramón Díez Guijarro (Bankia Estudios ) | The first weeks of the opening of the economies are serving to gauge the response of consumption, a key variable in determining the profile and intensity of the recovery. In the US, the fiscal programmes for aid to families injected more than 300 billion dollars into disposable income in the second quarter. In Europe, instead of using direct aid as in the US, they have preferred to activate temporary employment suspension programmes (ERTE in Spain, kurzabeit in Germany, etc).
The Recovery Fund exceeds the Merkel/Macron proposals with an amount of €750 billion euros (equivalent to 5.4% of the EU27’s annual GDP). Italy and Spain would be the countries to most benefit. This was something that was quickly reflected in the performance of peripheral credit on Wednesday, especially in the financial sector, with improvements on average of about 10bp in the CDS of banks in both countries. For its part, France and Germany will receive transfers of 39 Bn and 29 Bn, respectively.
Yves Bonzon (Julius Baer) | On the fiscal side all countries might provide support measures that are quantitatively and qualitatively strong enough to ensure recovery when the containment ends. The way the required transfers from governments to their private sectors are financed, in essence the chosen mix of tax increases, borrowing from private savings and monetisation, will play a determining role on the recovery capacity of different countries and regions.
ACS has closed the sale of 74% of its stake in a batch of six tranches of ‘shadow toll’ highways in Spain to the Hermes fund. The operation was agreed last November and will generate a capital gain of 40 million euros for the infrastructure firm. The group will keep the remaining 26% of its share in the highways, which it will also continue to manage. Their total and joint value amounts to 950 million euros.