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  • Coronavirus. The fiscal bomb that threatens Spain: "The deficit may perfectly reach 100,000 million"

"Setbacks of Spanish GDP in 2020 unprecedented in recent history" and a "significant, but not complete , recovery of the flow of activity and employment that was expected before the pandemic." The Bank of Spain has published its first forecasts on the impact that the crisis unleashed by the coronavirus will have on the Spanish economy and the results are very negative, with an estimate of maximum impact that goes far beyond what the Fund estimated last week. International Monetary (IMF).

The organization led by Pablo Hernández de Cos has followed two types of methodologies, with three different scenarios for each of them. In total, therefore, six possibilities in which the most negative anticipates a collapse of 13.6% in 2020 . It is the worst assumption in the so-called supply-side approach, and assuming that confinement lasts for 12 weeks and that standardization will be incomplete at the end of the year, "particularly in the branches related to hospitality and leisure". The negative hands scenario with this same methodology foresees a contraction of 6.6%, and for this it would be necessary for the confinement not to exceed eight weeks and a "almost complete" normalization after it, which seems to be highly unlikely.

This approach, explains the document that the supervisor has published today, does not, however, allow forecasting beyond this year and therefore also goes to "simulations of different scenarios with the Bank of Spain Quarterly Model (MTBE)". In this case, the pro scenario is slightly less negative since it predicts a collapse of the Gross Domestic Product (GDP) of 12.4% .

A catastrophic scenario

In this case, a significant proportion of companies "would not be able to prevent liquidity difficulties from turning into solvency problems" and the confinement would also last 12 weeks. The unemployment rate, meanwhile, would soar to 21.7%, the deficit would be 11% and the debt would reach 122.3% . Furthermore, in 2021 the rebound would be strong, at 8.5%, but insufficient to recover everything lost. And unemployment would continue to touch 20%, the budget deviation would exceed 7% and the debt would remain at 120%. A catastrophic scenario.

The least negative simulation in this case anticipates a fall in GDP of 7%, with an unemployment rate of 18.3% and debt of almost 110%. And the intermediate, anticipates a fall of 9.5% with a rebound of 6.1%. The debt would go to 115% and unemployment would continue to exceed 19% in 2021. It would mean destroying in just a few months everything created in terms of employment since 2016 .

According to the criteria of The Trust Project

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