This year alone, the coronavirus will have an impact on the world economy 44 times greater than the financial crisis of 2008-2009. This has been explained by the chief economist of the International Monetary Fund (IMF), Gina Gopinath, at the press conference to present the report of World Economic Outlook, recalling that “the magnitude of the global collapse that we are facing – which is 4.4% for now – is unprecedented. The global financial crisis was 0.1%.”
In the case of Spain, however, the difference is much smaller. Not because the country is going to emerge unscathed from the Covid-19 crisis, but because the catastrophe it will suffer this year – unparalleled in the developed world – adds to the catastrophe of the crisis from 2008 to 2013 , which was already much larger in Spain than in most of the world. Between 2009 and 2013 -the years of the Eurocrisis- Spanish GDP fell 7%. In 2020, according to the IMF, it will make 12.8%. That is, almost double.
Gopinath, however, has warned that these figures are not definitive, and that the damage caused to the world economy could be even greater. The solution is not in the hands of economists, but of governments, pharmaceutical companies, and doctors. As the IMF chief economist said to conclude her press conference, “there is tremendous uncertainty. This is far from over. It could be worse. Of course, we hope that things will be better than expected, but that depends on whether we have better news on the health front. ”
And that is where the new source of uncertainty is beginning to emerge in the Fund’s analysis. Because, as Gopinath has stated, “right now, the financial markets are doing better than the real economy.” Now, how long is that going to last? Is there a risk of ‘contagion’ from the ‘real economy’ to the financial one, with which we can have two crises for the price of one?
In principle, the IMF rules out this possibility, because it considers that in 2021 the extraordinary aid launched by the States will continue, in the form of “an accommodative monetary policy are precedents and great lines of fiscal rescue” that will allow the companies and family economies “stay away from the risk of insolvency,” according to the Global Financial Stability Report (GFSR, according to its acronym in English), published this Tuesday by the institution.
The problem is if the crisis lasts longer than expected. In that case, there is a danger that “pressures on liquidity will resurface, and that bad debts will rise rapidly and become more widespread,” according to the report. If that is the case, Spain will be in the crosshairs of the worsening of the crisis, because the financial blow will be harder on small and medium-sized companies (SMEs), and the sectors of activity that require more contact between people. And Spain is a country of SMEs that largely lives off the ‘high-contact’ sector par excellence: tourism and hospitality. For now, the extra measures have only served “to buy time,” according to the IMF.
This is clear when the GFSR lists the sectors hardest hit by the crisis and those that have emerged unscathed. The first: “airlines, hospitality, energy, and financial sector”. Those who have not suffered so much: “information and communication technologies”. The economy of Spain is clearly in the first group. Although the Fund does not carry out a country-by-country analysis, it does carry out a simulation with a group of 29 aggregated economies that contains indirect warnings to countries such as Spain, whose economic structure is based on SMEs.
As the report explains, “massive bankruptcies and defaults have been avoided thanks to the support of the governments, which has been massive and presented in a preventive manner. But, as companies have been borrowing more to cope with liquidity shortage, some risks to their solvency have been postponed to the future SMEs, especially in ‘high touch’ industries [such as tourism] they are much more vulnerable than large companies that have access to capital markets.