Spain’s Gross Domestic Product (GDP) fell 5.2 percent in the first quarter of 2020 as a result of coronavirus confinement measures, according to an advance report released by the National Statistics Institute (INE). This is the largest quarterly drop in nearly a century. The last time such a figure was seen was after the Spanish Civil War (1936-1939).
The biggest quarterly drop in recent times occurred in 2009, during the recession, when the Spanish economy fell 2.6 percent between January and March. The GDP is the best indicator to measure production in the country, and in turn, its wealth.
In April, the Bank of Spain estimated that the coronavirus crisis would lead to a 4.7 percent fall in the first quarter. More alarm bells were sounded this week when the INE released figures on retail trade and active employment.
According to the INE, retail trade fell by 15 percent in March – a monthly figure that usually falls or rises by a few tenths of a point. This blow occurred despite the fact that Spain had only been under the coronavirus lockdown for two weeks, and that January and February were good months for business.
The INE EPA active workforce survey shows that employment figures in Spain fell by 285,600 people between January and March – the greatest drop since the recession of 2012. The survey also found that the number of hours worked had fallen 4.25 percent in the first quarter.
The figures from the second quarter are expected to be even worse. The outcome for the year will depend on the deescalation of the confinement measures. According to the government’s plan, businesses will be able to gradually reopen under strict conditions. But there is still great uncertainty, and the Bank of Spain estimated in April that Spain’s GDP could fall by anywhere between 6.6 percent and 13.6 percent this year. This would be an unprecedented fall: during the recession, between 2008 and 2013, Spain’s GDP gave up 9.5 points.