Two new red alerts went on yesterday around the Spanish economy. Industry and tourism, two of the engines of national accounts equivalent to a quarter of GDP, already show clear signs of slowdown spread by the global economic slowdown.
Summer in Spanish factories has been very negative. The industrialists have stopped machines before the collapse of the orders of the last months and have chosen to take out the stock of their warehouses to fulfill the orders. This is a defensive cost adjustment mechanism that has sunk production "at the strongest pace in almost six and a half years" and has led to a reduction in personnel at the facilities, explains the consultant IHS Markit, who analyzes the evolution monthly of the sector through a survey of 400 industrialists.
These data and the global economic outlook for the coming months have generated among the businessmen a climate of pessimism about their future activity. "The concern about the continuation of the recent weak demand trend and the concern that the current global recession deepens has had a negative impact on confidence," the report details.
The tremors in the activity have moved throughout the entire production chain until reaching the suppliers. The delivery times of the inputs used in industrial processes "showed the greatest deterioration in their behavior so far this year." «August turned out to be another challenging month for Spanish manufacturers. Production fell sharply and there were more job destruction as confidence in the future remained weak, ”says Paul Smith, IHS Director of Economics.
Much of the problem of Spanish factories has its origin abroad. The economic weakness of the euro zone - with Germany on the verge of recession - and the increase in commercial protectionism have spread like a virus throughout the region as a whole and have resulted in seven consecutive months of contraction of industrial activity. The German country is the most penalized with "the strongest employment reduction rate in just over eight years," the consultant warns.
The fear of a trade war between the US and China pushed trust between companies to their lowest level since November. "Great pessimism was observed regarding the future in Austria and Germany, and German companies indicated the highest degree of pessimism for the period of more than eight years of data collection," explains IHS.
Tourism, the main engine of the country's economy, also shows signs of exhaustion. The arrival of foreigners in Spain fell in the month of July for the second consecutive year due to the lower arrival of British and Germans to our country, according to data published yesterday by the INE.
Specifically, 9.9 million tourists arrived, 1.3% less. The fall worries for two reasons: first, because it is the second consecutive month of July in which the arrival of foreigners is stopped. Last year the decline was more pronounced, as 4.9% fewer visitors arrived to our country, the largest drop since April 2010.
The fall in our main issuing markets (United Kingdom and Germany) is also concerned. In the first case, the decline has been linked to uncertainties linked to Brexit and the devaluation of the pound. British travelers no longer have as much purchasing power as before when they come to our country. The result is that in July 2.16 million Britons came, 2.2% less than last year. With respect to Germany, the threat of recession also slows its citizens when planning their vacations and Spain reached 3% less than in July last year.
The sector is relieved that tourist spending has increased despite the fact that arrivals fall. Foreigners who arrived in Spain in July spent 11,980 million euros, 2% more than in the same month last year. The average daily expenditure per tourist has increased by 4.9%, to 160 euros. In the accumulated year (from January to July) 48 million tourists arrived in our country, 1.9% more than in the same period of 2018.
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