ARCHIVED - Covid-19 crisis set to cause biggest hit for the Spanish economy since 1936

The 8 per cent drop in GDP predicted by the IMF would be the largest since the start of the Civil War

Unemploymment in Spain could rise to over 5 million this year

In the fifth week of the state of emergency in Spain which has resulted in the majority of the population being confined to their homes, and while those working in certain “non-essential” activities such as construction are nervously returning to work after a prolonged 2-week Easter break enforced by the government, more and more attention is being paid to what may be the medium- to long-term economic effect of Covid-19 on Spain and on the global economy as a whole.

Three and a half months ago Spain ended a year of solid if unspectacular growth in economic activity after an increase of 2 per cent in GDP during 2019, and the IMF were forecasting similar results for 2020 until just a few weeks ago. However, the rapid spread of the pandemic in this country since early March has resulted in a drastic alteration of that forecast, with the latest prediction being that GDP will fall this year by around 8 per cent – the most significant economic downturn since the start of the Civil War in 1936 (when economists estimate a fall of 26.8 per cent in a single year occurred).

At the same time, the IMF foresees that the unemployment rate will leap back up to 20.8 per cent, having fallen to 13.78 per cent at the end of last year (according to the Active Population Survey for the fourth quarter).

What that means in terms of jobs is that practically all of the employment which has been created in the last six years could be wiped out at a stroke by the coronavirus, with the jobless total potentially rising from just over 3 million at the end of February to well in excess of 5 million. It is impossible to know whether that will actually happen until the state of emergency is lifted and it is seen whether businesses which have shut down in the last month re-employ their staff: in the meantime over 450,000 companies have filed for “ERTE” temporary employment regulation schemes, and while it is theoretically possible that the 3.3 to 3.5 million workers affected could all be taken on again this appears less and less likely the longer the coronavirus restrictions remain in place.

(In the Region of Murcia the official figures released do not include the number of employees affected by ERTE schemes, but unions estimate that the 13,600 schemes relate to approximately 150,000 people).

What’s more, it has to be borne in mind that these are simply the most recent predictions issued by the IMF in a situation of almost unparalleled uncertainty, and that various scenarios such as a second wave of Covid-19 could see them worsen considerably. Should no second wave materialize then the organization led by Kristalina Georgieva is currently forecasting a strong recovery during 2021, with Spanish GDP expected to rise by 4.3 per cent assuming adequate policies are adopted by the government.

Of course, Spain is far from being the only country where economic forecasts have been drastically downgraded with the spread of the coronavirus, but the effects in this country are likely to be among the most serious in the EU. The IMF expects sharper downturns only in Italy and Greece (-9.1 per cent and -10 per cent respectively), while the effects will be only slightly milder in France and Germany.

Similarly, downturns are forecast of around 6 per cent in the UK and the USA and 3 per cent in the global economy (the most significant fall since 1930, if the estimate proves to be correct), before recovery begins all over the planet in 2021.

But again it has to be emphasized that these expectations of a relatively rapid recovery are dependent on the coronavirus emergency ending this year: as Kristalina Georgieva herself has stated, “no country is safe from the pandemic while there continue to be cases elsewhere”.

Remember: LOCKDOWN MEANS LOCKDOWN. STAY AT HOME. STAY SAFE AND DO YOUR BIT TO REDUCE THE SPREAD OF CORONAVIRUS.

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What to do if you are in the Region of Murcia and believe you may have contracted the virus

The regional government has set up a special helpline to supply information to members of the public (900 121212) if they suspect that they may have contracted the virus rather than going straight to hospital or to a medical centre.

Sensible precautions

The advice being issued to members of the public by medical authorities all over the world coincides on the following points:

- Wash hands frequently with either soap and water or a sanitiser gel

- Catch coughs and sneezes with disposable tissues – and throw the tissues away immediately after use before immediately washing your hands!

- If you don’t have a tissue, use your sleeve – and wash the item of clothing used at the next opportunity

- AVOID touching your eyes, nose and mouth with unwashed hands

- AVOID close contact with people who are unwell

- Don´t panic!