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A year ago, the city of Wuhan had just been confined a few days ago; in Spain, no case of coronavirus had yet been registered; and one of the major economic concerns was that the Spanish Gross Domestic Product (GDP) was in a clear slowdown after registering the lowest growth in five years: 2%. Today, Wuhan is an example-presumably-of economic, social recovery and in terms of pandemic; Spain is in the middle of the third wave with a number of daily infections that is close to 35,000 cases; and the advance of National Accounts published this Friday by the National Institute of Statistics (INE) reveals that GDP plummeted 11% in 2020, the highest figure in peacetime history and, most likely, the biggest collapse of any developed economy in the year of the coronavirus.
This historic figure is the final result after a quarter, the fourth, in which the economy managed to rebound slightly compared to the previous quarter: 0.4%. It was, therefore, a positive period, although very far from figures such as 2.4% that the Minister of Social Security, Josà © Luis Escrivá, predicted at the beginning of last December. And in year-on-year terms, that is, compared to the same period in 2019, the drop was -9.1%.
The recovery recorded by GDP in the third quarter, therefore, has slowed down in a very evident way, a direct result of the lockdown measures and the increase in cases. And that causes a slower entry into the first quarter, the so-called carry-over effect, which according to the vast majority of analysts and national and international organizations significantly reduce 2021 growth.
To as? It will depend on how long the third wave lasts, on the speed of the vaccination process and on the Government’s ability to develop and implement the plans for European funds. What does seem clear, once again in the light of the vast majority of forecasts, is that in no case will it reach the almost 10% expected by the Executive. In fact, sources from the Government itself recognize that this figure that was reflected in the Budgets and that is the basis of, for example, the forecast of income and expenses, it’s practically impossible.
The Funcas panel, for example, estimated a few days ago that GDP had collapsed by 11.2% in 2020, very close therefore to what finally happened, and that in 2021 it will rebound by 6.3%, Meanwhile he International Monetary Fund (IMF) foresees a rebound that will stay below 6%.
And the Bank of Spain, body with which Escrivá lives a particular war of figures and accusations, last month reviewed its projections and the three scenarios that it has handled since the crisis began. In the mild period, which forecasts growth in the fourth quarter somewhat higher than that which has finally occurred, it reflected an annual drop of 10.7% and a rebound in 2021 of 8.6%. However, in the central scenario, which is the one they maintain as the most probable, the fall was 11.1% -almost the same that finally occurred– and the advance remained at 6.8%. And in the severe, the fall went to 11.6% and the rebound was only 4%. This is far from what the Government anticipates.
Some recovery in consumption
The National Accounts figures, however, also leave some positive readings and figures. Probably the most relevant is that national consumption, that of families, rose by 2.5 points compared to the third quarter. This pillar is essential for the Spanish economy and it must be for the recovery. Savings figures show that households still have room to consume and therefore to drive recovery.
But for this it will be necessary for them to have greater security, for the pandemic to be controlled and for the restriction measures to be lifted and even disappear. The Ministry of Economy estimates that this time may be around summer and therefore they expect a second part of the year in which the economy grows strongly and in which, as occurs in times of growth, the Spanish economy gives positive surprises. But even so, full recovery still looks a long way off.
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