BBVA detects a slowdown in the economy and urges to accelerate the rate of vaccination

The Spanish economy stagnated in the last quarter of last year to the beat of the restrictions on mobility and activity approved by the autonomous communities to face the second wave of Covid-19 and the forecast of BBVA Research is that this stagnation It will also last during the first quarter of the year as a result of the third wave of the virus onslaught and will weigh down the evolution of the Spanish economy in 2021. Translated into figures, the bank’s analysis service forecasts suggest that the evolution of GDP was 0.1% in the final stretch of 2020, it will be 0% in the first quarter of 2021 and will end the year with a rebound of 5.5%, lower than the 6% that the entity predicted back in the fall and significantly below the 9.8% of the forecasts Government officials.

BBVA analysts point to several factors to explain this situation, such as the intensity of the second wave of the virus in a large part of the main European countries, especially in Germany; or Brexit, but points to internal restrictions on activity and mobility also as one of the most relevant factors to explain these figures. From that perspective, they understand that the best that the authorities can do to try to alleviate this situation and accelerate the reactivation of the Spanish economy is to accelerate the vaccination process of citizens and therefore the achievement of group immunity. “You have to look at good international practices, such as what has happened in Israel, to vaccinate the population as soon as possible,” he recommended Rafael Domenech, Head of Economic Analysis at BBVA Research.

The positive part is that the economy fell in 2020 somewhat less than initially expected, due to the strong pull of the ‘new normal’ between June and August, and that everything indicates that the economic impact of the third wave in Spain will be less significant than that of the second wave and, of course, that of the first, which placed Spain as the country hardest hit by the coronavirus. In the same way that last spring Spain was the country that suffered the most from the confinements that followed the outbreak of the pandemic, this time the impact in Spain will be much softer than in the rest of the countries of Europe. A only relative consolation, because the collapse of the eurozone economies will affect the domestic export sector and will have an impact on growth.

The evolution of the Spanish economy throughout this year will depend on the ability of the authorities, not only the Spanish but also the European ones, to put the pandemic under control and that is the main source of uncertainty in the economic forecasts. as recognized by BBVA analysts. What they foresee is that the Spanish economy will begin to recover in the second half of this year and will accelerate its convergence with growth levels prior to the pandemic already in 2022, contrary to what the Government estimates, which foresees a strong recovery in 2021 and somewhat more moderate growth thereafter. BBVA Research’s augury is that the Spanish economy will not normalize until well into 2022 Or, in other words, that he has a tough journey of several months ahead of him.

The discrepancies with the official forecasts are partly based on the different approach to the pull effect that European funds will have this year. The Government’s forecasts are based on the fact that the execution of European funds will contribute 2.7 points to GDP growth alone this year. BBVA is less optimistic. Understand that this impact will be distributed between 2021 and 2022, and that it will be much less intense this year and more relevant next. It would contribute one point in 2021 and two in 2022.

Employment and tourism concern

BBVA’s analysis service also maintains that this recovery will be uneven both by region and by sector. For example, the entity’s analysts maintain that the recovery of tourism will not take place until 2022, which will be when they foresee that there will be a massive influx of foreign tourism. “It is possible that this year the campaign will be somewhat better than that of 2020, but there are still many uncertainties about the evolution of the pandemic and, therefore, about the confidence of tourists, for example to catch a plane,” he warned Miguel Cardoso, Chief Economist for Spain at BBVA Research. On the other hand, they warn that the recovery will not be particularly dynamic in terms of employment. His forecasts suggest that while the economy will grow by 5.5% in 2021, employment will only grow by 2%; while in 2022, the economy will grow 7% and employment a more modest 4.5%.

The impact of ‘Filomena’

BBVA’s analysis service, which handles daily data on the evolution of bank card payments – an indicator that has become extraordinarily relevant during this crisis to measure the impact on consumer behavior of the confinement measures or decisions to close or restrict activity in the hospitality industry -, you have received a significant drop in consumption especially in Madrid as a result of the storm ‘Filomena’. In light of the data available to them, which will be published in detail this Friday, the snowstorm has caused the face-to-face spending with a credit or debit card has fallen by 24% between the week of January 4 and 10 compared to the same period of the year 2020 and that something stagnant continues even this week.