There is nothing more than a handful of numbers. The horizon is still hazy. A recovery worthy of the name is still a long way off. But Spain is starting to recover from the effects of 2020, including the biggest drop in production since the Spanish Civil War.
After a year to forget, several indicators reviewed by EL PAÃS suggest that the country’s economic engine is restarting. The winter of discontent left by the pandemic gives way to clearer skies: the government sees signs of recovery from mid-April, and the economy is expected to accelerate in the coming months – subject to risks associated with the epidemiological situation. The fate of the economy now rests on the summer, when the tourist season is in full swing.
All pandemics leave a trail of nightmares in their wake, but history suggests they are followed closely by interesting times. There are dizzying economic recoveries where uncertainty evaporates and people start spending again. There is creative destruction when businesses and industries are able to identify new opportunities. And there is the political risk: the “Spanish flu” was followed by the Roaring Twenties, and later by the rise of fascism, communism and other demons of the twentieth century. At present, Western economies have just entered the first phase: they are recovering from the dramatic effects of the pandemic and the Grand Containment. Spain is a little behind in this wave, but it is getting there, judging by half a dozen indicators that reflect a change in mood.
The first sign is actual employment: the number of Social Security contributors, after deducting employees from the ERTE job retention scheme and the self-employed from Covid-related benefits, fell steadily until February. , then began to grow in March and jumped. in April with nearly 70,000 new affiliations. In fact, the labor market has been much more resilient this time around than in previous crises.
The second sign is an improvement in confidence indicators for both industry and services: the purchasing managers index (PMI), which assesses the dominant direction of trends in these sectors, is at its highest level. for two years.
Third, the economy is seeing an increase in consumption, as evidenced by the higher figures for credit card payments. And fourth, the industry is picking up again, as shown by indicators for industrial production, energy and cement consumption. A fifth hope is that even the hard-hit service sector is starting to come to life, according to early estimates of hotel bookings.
Almost all of these figures could be summed up by a sixth element: the acceleration of the vaccination campaign and its impact on infections, deaths and the occupation of hospital beds by Covid-19 patients.
“The recovery will start in the second half of the year,” Economy Minister Nadia CalviÃ±o said on Monday. His department has just reduced the 2021 growth forecast due to a negative first quarter, with a 0.5% drop in gross domestic product (GDP) caused by the third wave of coronavirus and the containment measures that have regular.
But vaccination is changing all that, and the second quarter of the year could end in darkness. Data checked by the Ministry of the Economy and the Bank of Spain show that there were first signs of recovery in March which consolidated in April. “Things are improving and the normal course of events would be for growth to accelerate gradually, always depending on the evolution of vaccines and fewer problems due to the virus,” said Ã“scar Arce, chief economist of the Bank of Spain. â€œPreviously, the short-term risk was the pace of vaccination; now, with a view to summer, the key lies in safeguarding the tourist season; towards the end of the year it will be important to implement the European funds.
Economic forecasting is essentially an organized mirage, and the pandemic has made forecasting more precarious than ever. But Spanish economists are looking more at other countries alongside their vaccination campaigns – places like Israel, the UK and the US – to find out what to expect. And we must expect that once the uncertainty is lifted, all the savings held back by Spanish households (representing three percentage points of GDP) and by companies (billion euros) will be released, pushing consumption up. and investment on the return of improved expectations.
“Leading indicators offer the first good news on the consumption side, and the normal thing would be to see accelerated GDP growth, ending the year around 6%,” said Ãngel Talavera of Oxford Economics. â€œWe have the feeling that we have left the worst behind us. But there is still a lot of uncertainty, especially when it comes to the tourist season and markets like Britain. If that clears up, we could see a very positive increase in expectations, but the bottom line is vaccines and infections. Decisions on the main markets that send tourists to Spain will be made in the coming weeks. This means that Spain must keep the situation under control, as tourism contributes 12% of the economy.
There are two major differences between this crisis and the one that preceded it. The labor market has held up much better thanks to measures such as the government’s ERTE job retention scheme. And Europe did not make the mistake of demanding austerity measures, as it did 10 years ago. But the road ahead still looks a lot like the mountain stages of the Tour de France: “Brussels must make decisions on budgetary rules, and the European Central Bank must clarify what it will do from the spring,” said Carlos MartÃnez Mongay. , former Deputy Director General for Economic Affairs at the European Commission.
“But Spain must minimize political risks in order to send the right signals to economic players,” Mongay added. â€œConsensus is needed for reforms. And government support needs to be clarified in order to implement the [EU] recovery plan with guarantees.
Spain’s minority government, made up of a left-wing coalition of the Socialist Party (PSOE) and Unidas Podemos, succeeded in getting the national budget approved a few months ago after years of prolonging the previous one. This made the executive believe that the remainder of the political term would be a relatively placid affair. But successive waves of infection and enormous political noise quickly put this notion to rest. A motion of censure in the southeastern region of Murcia sparked a political domino effect that culminated with a resounding victory for the Conservative Popular Party (PP) in an early election in the Madrid region last week.
Now, Prime Minister Pedro SÃ¡nchez of the PSOE is hoping for two years of strong economic recovery to regain the initiative, but analysts are not fully convinced. â€œThe economy has started to rebound, and that could generate confidence. But the recovery has been delayed by the government’s passive attitude towards tourism and business aid, in a scenario where tens of thousands of entrepreneurs could be forced to close, â€said analyst Juan Ignacio Crespo. “And the GDP levels will not recover until the end of 2022 or 2023. I see a lot of doubts in the executive.”
english version by Susana Urra.