The Spanish economy: Signs of recovery in the midst of high uncertainty

The Spanish economy: Signs of recovery in the midst of high uncertainty

Fecha: julio 2020

Raymond Torres y María Jesús Fernández

Valoración bursátil, Banca, Saneamiento, COVID-19, Recuperación

SEFO, Spanish and International Economic & Financial Outlook, V. 9 N.º 4

COVID-19 is forecast to have contributed to an 18% quarter-on-quarter decline in GDP in 2Q2020. While lockdown measures have eased, the economy is not expected to reach pre-pandemic levels until 2023, at best. From a sectoral perspective, the automotive industry was particularly hard hit, with a contraction of nearly 90% in April and May. Likewise, the services sector’s turnover index in April declined by 42%. However, job losses in the construction sector exceeded those of the services industry. International trade has been strongly affected, too. April figures show exports declined by 32% in real terms compared with February, and imports dropped by 29%. COVID-19 also contributed to a significant expansion of government debt by more than 24 billion euros in 1Q2020. While the Spanish economy should experience a rebound in 3Q2020, it will not make up for the ground lost during the state of emergency. In general, projections are subject to significant uncertainty due to potential new outbreaks, the increase in savings rates, and the fate of furloughed workers once the employment support scheme expires.

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