Coronavirus: Bank of Spain predicts “unprecedented” drop in GDP in 2020

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The Bank of Spain announced on Monday April 20 that it expects the fourth largest economy in the euro area to fall from 6.6% to 13.6% in 2020 due to the pandemic of new coronavirus.

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In a press release, the Bank of Spain explains that the fall in GDP will be "  unprecedented in recent history  ", even if its magnitude is subject to "a  lot of uncertainty  ", linked in particular to the duration of the confinement, decreed on March 14 in Spain and which must be extended at least until May 9.

These forecasts are "  provisional  " and will probably be modified in the coming months depending on the evolution of the epidemic, anticipates the Bank.

Tourism, pillar of the Spanish economy, in danger

In the case of confinement which would be limited to eight weeks (that is to say on May 9), the decline in GDP could reach 6.6 to 8.7%. On the other hand, the fall could reach 13.6% if the confinement reached twelve weeks and the return to normal was not complete at the end of the year, particularly in the tourism sector.

Among the main factors that could lead to the recession, the "  pronounced contraction of internal demand  ", due to the explosion of unemployment and the disruption of economic activity, explains the central bank.

While exports and tourism are the pillars of the Spanish economy, the Bank of Spain also cites "  a deep weakening of demand for goods and services from the rest of the world  ", as well as "  the interruption of tourist flows  "

But the press release specifies that in 2021, Spain should recover "  a significant, but not total, part of the flow of activity and employment which was expected before the pandemic  ". The International Monetary Fund predicts that the contraction of Spanish GDP could reach 8% this year.

According to the IMF, the unemployment rate could jump to 20.8% in 2020, while Spain already suffers from the worst unemployment rate in the euro zone after Greece, at 13.8%. Almost 3.9 million Spaniards are currently partially unemployed, according to Madrid.

 ■ Spain falls below 400 for the first time in four weeks

The daily report of the new coronavirus in Spain passed, this Monday, under the bar of 400 dead for the first time in four weeks, being established with 399 dead, according to the announcement of the ministry for Health .

But the number of cases detected has passed the 200,000 mark, at 200,210, while the country has paid the heaviest price for the pandemic behind the United States and Italy. The daily toll had already been brought down to 410 dead on Sunday, a sharp drop deemed encouraging by health authorities, who hope to have crossed the peak of the pandemic in early April. The fall in the number of deaths but also of hospitalizations and admissions in intensive care relieved the health system, overwhelmed for weeks.

(With AFP)

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• Coronavirus
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