Spain’S Economy Shrank By 11% In 2020, The Biggest Recession Since The Civil War.
2021-01-29 | by CusiGO
Spain’s economy fell 11% last year, according to data released on Friday by the National Institute of statistics. This is Spain’s biggest economic collapse in peacetime. Since the civil war, the scale of the contraction has never happened, the outbreak of the virus is behind the battle. The restrictions imposed by the authorities to prevent the spread of coronavirus, especially the severe 94 day imprisonment imposed between March and June to prevent a health collapse, largely explain this regression. The slight recovery in the second half of this year is not enough to make up for the damage of the epidemic.
In fact, according to national accounts data released by the National Bureau of Statistics (INE) on Friday, Spain’s economy recovered some of its lost ground with a 0.4% rise between October and December. As a result, Spain’s economy has pulled out of recession, but the overlap of the second wave at the end of the year and the third epidemic wave at the beginning of 2021 seems to slow the recovery. The most optimistic agency estimates that Spain’s economy will not return to the expected level until the end of 2022, Although most people set the summer of 2023 as the date to get rid of the epidemic. The government estimates that GDP will shrink by 11.2% in 2020 and rebound by 7.2% in 2021, regardless of the impact of European aid. If Spain manages and invests in the nearly 30 billion euros in aid this year from the European rebuilding fund promised in Brussels, the executive expects the Spanish economy to rebound to 9.8%.
The statistics clearly show that the services sector, especially those related to tourism and hotels, has suffered the most in the past year. The limitation of mobility makes tourism almost a ruin. The industry usually accounts for about 14% of GDP, but it has been greatly affected by the sharp drop in the influx of foreign tourists, from nearly 85 million in 2019 to slightly more than 20 million in the year of pandemic, With the decline in air travel – airlines are one of the hardest hit companies, with only a third of their normal income – hotels and other businesses that specialize in foreign tourists have been closed, which the nation has so far been unable to make up for. This has led to the closure of restaurants, hotels and many shops in most tourist areas. As reflected in yesterday’s (Thursday’s) labor force survey (EPA) statistics, the employment rate in areas such as the Balearic Islands and the Canary Islands has declined and the unemployment rate is higher than average.
In addition, due to the uncertainty of the economic situation and the decline in the unemployment rate of many workers, the deterioration of the external sector and the decline in domestic demand have put pressure on economic activities. The paralysis in the first half of this year left half of the world idle, affecting imports and exports. In the first half of the year, government consumption was almost the only driving force to avoid a bigger disaster. As a result, last year’s public spending reached an all-time high, reflected in the deficit and public debt figures, as a result of the need to respond to the health crisis and financial assistance to sustain the economy’s vitality.
In the second half of the year, the end of the restrictions revived the economy, with GDP growing by a historic 16.4% in the third quarter, the summer. But soon, the second wave and the third wave at the end of the year masked that again.
Despite a decline in the first half of this year (GDP fell by 17.8% in the second quarter), the economy has been slowing due to government support. Among the almost concerted actions of all European countries, the government launched a package of aid and stimulus measures in March to protect families, small and medium-sized enterprises and enterprises most affected by the coronavirus crisis. He launched ETS, a program that allows companies to save costs to avoid layoffs, an effective tool to prevent the unemployment rate from rising too much like other crises. It has also launched the business aid program and the guarantee line of the official credit agency (ICO) to ensure the liquidity of more viable enterprises. While these measures helped to avoid further deterioration, they did not prevent the Spanish economy from having its worst year since the end of the civil war.