Spain | This Time It's Different

The origins of the country's recession lie not in the accumulation of imbalances in a certain market and the usual subsequent shift in demand, but rather in a pandemic and the restrictions enforced on the supply of goods and services to limit its spread.

Key points

• Key points:
• Overall, GDP is estimated to have fallen 25% during the first half of the year compared to the end of 2019, while the average reduction for the whole 2020 is expected to be 11.5%.
• Sectors that traditionally provided security in times of crisis have suffered from the impact of restrictions. One such sector is hospitality.
• Moreover, most of the decline in spending has primarily occurred in domestic products, while import levels have fallen far less than would be expected given the shift in domestic demand.
• The workers who have suffered the most during the crisis are those who had temporary contracts, while job destruction has been highest among younger workers.
• This time around, the ECB is not expected to quickly reverse the measures it has put in place, and fiscal policy could remain expansionary if the European recovery fund is approved.

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