Spain plunged into recession in the second quarter after its gross domestic product tumbled by 18.5 percent due to the coronavirus pandemic, official figures showed on Friday, July 31, 2020.
In the first quarter, growth had fallen by 5.2 percent, the Institute of National Statistics said (INE). A recession is commonly defined as two consecutive quarters of a contraction in GDP.
The first of estimate by INE is broadly in line with the forecast by the Bank of Spain which had seen a contraction in the economy of between 16 and 22 percent for the period between April to June at the height of the lockdown when all non-essential activities were halted.
The restrictions imposed under the state of emergency, which began in mid-March, were only gradually lifted in May and June.
The business, transport, and hotels sector were all badly hit, with a 40 percent drop compared with the first quarter.
And tourism, a pillar of the Spanish economy which accounts for 12 percent of GDP, suffered from a 60 percent drop in revenues compared to the same period in 2019.
Construction fell by 24 percent compared with the first quarter and industry by 18.5 percent. Household consumption dropped by around 21 percent and business investment by 22 percent while exports fell by around a third.
The Spanish government sees the economy contracting by 9.2 percent overall in 2020 but the Bank of Spain says that figure could reach 15 percent.
– Recovery ‘years away’ –
Analysts at Capital Economics said they were expecting the Spanish economy to contract by 12 percent this year “with a return to pre-virus size years away”.
“The record plunge in Spain’s GDP of 18.5 percent is likely to have been one of the biggest falls of any euro-zone country in the second quarter, illustrating the severity of the country’s lockdown and its slow and partial recovery,” it said in a note.