INOSMI Russia
Dmitry Dobrov
The international monetary Fund named Spain as the European country most affected by the covid-19 epidemic. This year, according to the IMF, Spanish GDP will fall by 12.8% — the most negative indicator among developed countries in Europe. For comparison, the Eurozone’s GDP will fall by 8.3%, including Italy by 10.6%, the UK by 9.8%, Germany by 6.0%, the US by 4.3%, and Russia by 4.1%. Only developing countries such as Peru (-13.9% of GDP), Lebanon and Venezuela (-25%) are worse off than Spain. The covid-19 pandemic, writes the Spanish Pais (El Pais), swept through the country like a hurricane that swept away entire sectors of the economy. The strict lockdown imposed between March 15 and June 21 has had a particularly devastating impact on the tourism sector. Spain is one of the most visited countries in the world, with an annual tourist population of about 80 million people, providing 12% of GDP and 13% of employment. This is why the spring-summer lockdown brought down GDP by 18.5%, while in the rest of Europe the decline over the same period was 11.7%. The situation remains extremely difficult to this day. The annual drop in GDP of 12.8% is considered the deepest since the civil war of the 30s of the last century
At the same time, Spain remains one of the world leaders (5th place, about a million people) and the undisputed European leader in the level of coronavirus infection. In terms of mortality from covid-19 in relation to the population, the country is in the European “three” along with Belgium and the United Kingdom. In terms of negative indicators, Spain was even ahead of Italy, a country with comparable climatic conditions and cultural traditions. Spanish experts try to explain this phenomenon, naming among the reasons for the wider testing of the population than in Italy, the “herd” behavior of Spaniards, especially in summer, the premature opening of businesses at the end of June, the influx of foreign tourists in the second half of summer, the work of bars, discos and clubs in the late hours, etc. On the other hand, it is noted that Italy is better than Spain has established a tracking system for vectors of infection.
The epidemic has revealed serious shortcomings in the Spanish health system, which is well adapted to provide primary care and treat traditional diseases. However, Spain, like most European countries, has no experience in dealing with viral pandemics, especially of a new type. There is practically no culture of antiviral hygiene in the country — disinfection of surfaces, sterilization of objects, thorough hand washing. Hospitals are insufficiently equipped with gloves, masks, and ventilators. Nursing homes are in a depressing state, accounting for almost half of the deaths from covid-19. Experts believe that the largest epidemic in a hundred years revealed significant shortcomings in the organization of health care and serious miscalculations on the part of the state.
The Spanish tourism and services industry has suffered a severe blow, from which it will not be able to recover for a long time. So, in August of this year, the number of tourists arriving in Spain decreased by 76%. The unemployment rate will reach 19% this year and only fall slightly in 2021, as global tourism is unlikely to recover by then. In Spain, along with the tourism sector, small and medium-sized businesses have been severely affected, which do not have the financial reserves to withstand a long-term business shutdown. The main hope is placed on the aid Fund of 750 billion euros, which the European Union intends to allocate to the countries affected by the epidemic. Spain’s share in this aid package is 142 billion euros.
In the face of the pandemic, Spain’s public debt has risen to its highest level in decades. The government said that in 2020-21, it will be forced to suspend the budget restrictions imposed by the European Union in an emergency. Spain’s national debt will increase by 120 billion euros this year — from 99% to 123% of GDP, which is a kind of anti-record and far exceeds the debt ceiling of 60% set by the European Union. Economists note that there has not been such an increase in debt since 1947.
Despite the acute crisis, the state will continue to Finance the unemployed and underemployed, although this policy costs 4 billion euros per month. If this program is curtailed, the country faces a social explosion. Under pressure from trade unions and left-wing political parties, the government has imposed a ban on layoffs, and businesses are required to transfer workers to reduced working hours and part-time workweeks. Thanks to these measures, it was possible to reduce the number of partially unemployed from 3.4 million at the peak of the first wave to 750 thousand people at this time. Support for this category of the population, as well as assistance and loans to the self-employed, will cost the state 20% of GDP this year, and they will last at least until January next year. In total, 30% of Spaniards live on a pension, allowance or other form of state support.
Foreign observers note that the lifestyle of Spaniards in the conditions of the epidemic has changed dramatically, there are fewer happy faces on the streets, people do not gather in noisy companies, they communicate less with each other. Unlike the more reserved northerners, in Spain, social distance was not observed before, people hugged and kissed everywhere, sat very tightly. Now these “folk” habits have to be changed, and Spaniards sell gold and family jewelry EN masse to save the family business or just make ends meet. Now in Spain, the second wave of coronavirus is raging, but the authorities are afraid to impose the same strict restrictions as in March and June, fearing that they will finally finish off the economy.
What are the prospects for overcoming the crisis? According to experts, they are very unimportant, since they will require a revision of the entire economic model of Spain based on tourism and services. But so far, no one is going to change this model, hoping for an early end to the epidemic. However, Prime Minister Pedro Sanchez said that the exit from the crisis is not expected until 2023.