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Publication date: 23/09/2020

ARCHIVED – Spain’s economy enters recession: 17.8% GDP drop in second quarter due to Covid-19 “style =” margin: 5px 10px 5px 0px; floating: left “width =” 100% “/>

This is the largest quarterly drop recorded since surveys began in 1970 and is of unprecedented magnitude

The National Statistical Institute (INE) revised Spain’s GDP data by seven tenths during the second quarter of 2020, with the corrected figure now a 17.8% drop between April and June, the largest quarterly decline in the historic series that began in 1970. The final decline was seven-tenths higher than the figure estimated at the end of July, when the agency estimated that the Spanish economy had fallen by 18.5%.

In year-over-year comparison, the GDP collapse is 21.5%, down from the 4.1% drop in the previous quarter, and represents an almost five-fold increase from the second largest of this year. method of recording data, which first began in 1970. The second largest drop occurred at the onset of the previous economic crisis, when the real estate industry collapsed and unemployment began to rise quickly, when the gross domestic product fell 4.4% year-on-year in the second quarter of 2009, so the difference in the magnitude of what is happening right now is unprecedented.

This historic decline, which was accentuated compared to the 5.2% contraction in the first quarter of the year, was the consequence of the collapse in household consumption (-20.4%), the business investment in capital goods (-28.6%) and exports (-33.4%, while public administration expenditure increased by 0.3%.

The INE explains that when it first calculated the data almost two months ago, most economic development indicators only provided results until May, so the rest of the Information was obtained from sources other than those usually used and from indicator estimates based on administrative data. data, as recommended by Eurostat.

The change in GDP between April and June is the consequence of a negative contribution of national demand (consumption and investment) of 16.1 points and external demand (exports and imports) of 1.7 points.

The only economic sector that remained positive in the second quarter was agriculture, which grew 3.6% per quarter, while industry declined 19.1%; services, 18.3%; and construction, 21.9%.

Within services, only financial and insurance activities grew by 0.9%, while trade, transport and hotels registered the largest contraction, 39.6%.

In contrast, general government consumption expenditure rose 0.3%, one point less than in the previous quarter, and that of non-profit institutions, 0.2%, after two quarters of decline.

In a context of paralysis of activity and the closing of borders, exports (33.4%) and imports (29.5%) also fell.

The INE underlines in its report that the hours worked were reduced over this period by 21.7% compared to the first quarter of the year. In year-to-year terms, hours worked decreased by 24.9% and full-time equivalent positions decreased by 18.4%, which represents a decrease of 3,383 thousand jobs. This magnitude “more clearly reflects the effects induced on employment by the Covid-19 epidemic and the successive measures adopted”, comments the agency in its report.

Spain entered recession in the second quarter
Now that it has been confirmed that the Spanish economy collapsed by 17.8% between April and June, a period that almost entirely coincides with the validity of the state of alarm to fight the coronavirus pandemic, Spain is entering a technical recession after accumulating two consecutive negative quarters.


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