August 12, 2020
Regional & Urban Economics
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The spread of COVID-19 has had an unprecedented impact on the Spanish economy on various fronts. The lockdown that began in March did not last 15 days as initially thought, but ultimately went on for over 90 days.
The public deficit deterioration will be greater than expected three months ago. In an unprecedented crisis, the sustainability of public debt could be compromised.
Employment decreased by 1,074,100 people (-6.0% y/y). However, employees who worked fewer hours than usual due to ERTEs or partial unemployment amounted to 4,580,000, so the hours worked fell by 22.6% QoQ. The decline in the labour force due to the lockdown limited the rise in the unemployment rate till 15.3%
The results confirm the BBVA Research scenario. GDP growth was higher in Madrid, Navarra and the southeast of the peninsula (Andalusia, Murcia and C. Valenciana). On the other hand, a more marked slowdown is observed in the peninsular center (Castilla-La Mancha, Castilla y León and Aragón) and Cantabria.
The greater impact of restrictions on domestic demand, the reduction of consumption on domestically produced goods and services (in particular, social consumption) and the deployment of the tourism sector introduce a downward revision of growth in all the Autonomous Communities and especially on the Mediterranean coast.
The GDP of Catalonia could fall 12% in 2020 and grow 7.4% in 2021, which would lead to the destruction of 110,000 jobs. The impact of COVID-19 was significant and heterogeneous, as is the recovery. Public policies reduce the destruction of employment. But the risks remain on the downside.
Economic forecasts for 2020 indicate that the COVID-19 crisis will be the deepest and most intense crisis since the end of World War II — for Europe, Spain and the Community of Madrid and for the global economy.
As climate change and sustainability become more important measures of risks to assets and investment opportunities, the question of which U.S. cities are best positioned to lead in sustainable development needs to be addressed.