Spain braces for worst recession since 1930s Civil War

Woman with facemask in front of store going out of business in Córdoba on Monday. Photo: Rafael Alcaide / EFE via El País
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► IMF projects Spain GDP to plummet -8% this year, with 21% jobless rate
► Government readies for worst recession since 1936, at outset of Civil War

Spain’s economy will experience a catastrophic drop in economic output this year on the order of -8 percent, with overall unemployment levels jumping by nearly a third to reach 20.8 percent, according to country figures detailed in projections for a worldwide economic downturn resulting from the global coronavirus crisis released on Tuesday by the International Monetary Fund (IMF).

The figures for Spain point to the worse recession since 1936 at the outset of the country’s bloody 1936-39 Civil War. The projected fall in output is more than double the -3.6 percent downturn in economic output triggered in 2009 by the global mortgage default crisis and worse yet than in 2012 during a related sovereign debt crisis, when Spain’s GDP fell by -2.9 percent.

If unemployment levels hit the 20.8 percent projected by the IMF in its report, that figure would represent a 6.1 percent jump over Spain’s unemployment rate of 14.7 percent at the end of last year and would translate into the highest number of jobless in Spain since 2013, when the unemployment figure hit 27.2 percent.

► News Sources: El País, Público and La Vanguardia …

Worldwide, the IMF is predicting the global economic will show -3 percent in 2020 as a result of what its analysts have dubbed “The Great Lockdown” by countries worldwide that have shuttered factories and businesses, while confining people to their homes as a means of combatting the spread of the coronavirus.

According to the IMF, the contraction in global economic output will surpass that caused by the 2008 financial meltdown caused by the mortgage default crisis and will be the worst seen worldwide since the Great Depression of the 1930s.

That the economic downturn is linked to the extent of the lockdown measures taken by Spain and other countries there is no doubt. According to one Spanish economic analyst cited by the daily newspaper El País, for every additional week that Spain stays in confinement, the country’s GDP economic output will fall an additional -0.8 percentage points.

As a result of the lockdown in Spain, the IMF projects that the fall in gross domestic product (GDP) economic output for 2020 will be greater than the overall -7.5 percent drop experienced across all European Union (EU) countries. But the IMF projects that only Greece and Italy will show worse GDP numbers than Spain in 2020, with Greece’s economic output predicted to fall -10 percent and Italy’s by -9.1 percent this year.

► Real more in English at: El País, and EuroWeekly News …

The -8 percent drop in Spain’s GDP would mark the second-worst economic performance for the country in the last century, outdone only by the -23.5 percent fall in GDP in 1936 at the outset of the three-year-long Spanish Civil War.

Spain’s government responded to the negative IMF projections for country’s economy by acknowledging that the downturn will be “intense”, but noted that the IMF report also projects that it will be short-lived, with the economy in Spain expected to hit bottom by end-September and begin to recover in the last three months of this year.

In a statement, the government pointed hopefully to “an important recovery in 2021”. But in fact, while the IMF does project that Spain’s economy will rebound by 4.3 percent in 2021, that recovery will still leave it down -3.7 percentage points at end-2021 as compared to the level of GDP growth experienced just prior to the coronavirus pandemic.

► Click to read more news about Spain’s Coronavirus crisis …

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