The destruction of activity has returned hand in hand with the second wave and more and more organizations are warning that there will be a relapse in the last three months of the year. The last has been the Organization for Economic Cooperation and Development (OECD), which in its latest world economic forecasts warns of the “Strong increase in infections” in Spain that, together with the new confinements and others, will cause “a contraction in the fourth quarter.” In this way, if the institution drew two scenarios in its previous forecasts, depending on whether or not there was regrowth, the advance of 2020 allows to refine the shot and already predicts a single scenario. And although the worst forecasts for June are not fulfilled, which included a fall of up to 14.4% this year since the second wave has not been as damaging as the first, Spain will suffer the second biggest recession among the 46 states analyzed by the OECD, only surpassed by Argentina.
Our country will collect a drop in GDP of 11.6%. Only Argentina, with the most acute confinement measures on the planet, experiences a greater fall, of 12.9% in 2020, while the third economy with the greatest collapse will be the United Kingdom, with -11.2%. For next year, the OECD forecasts for Spain a recovery of 5% that will be 4% in 2022.
By mid-2020, the Spanish economy had harvested the biggest drop in the OECD after India, losing more than 21% of the activity. However, the growth of 16.7% in summer allowed the differences to be narrowed, although the OECD highlights that in September the number of tourists was 87.1% less than a year earlier, while card spending by foreigners it had plummeted 65% in October. There was much to recover, a wound that now reopens with the confinements of autumn.
Europe doubles the US recession
The fall this year, thus, is the largest in Europe, being twice that of -5.5% in Germany and surpassing Italy (-9,1%), France (-9,1%), Portugal (-8%) o Greece (-10.1%). The Government foresees a recession of -11.2% this year and a recovery of 9.8% in 2021 (with an impact of 1.6 points of growth coming from the tractor effect of European funds).
Europe, in fact, is one of the areas most affected by the pandemic. The Eurozone will contract by 7.5%, double that of the United States (-3.7%) and far from China, the origin of the epidemic and which shows an expected growth of 1.8% this year. It is the only country that will grow this year among those analyzed by the agency.
Restrictions sink services
The OECD predicts for Spain that if external demand and tourism recovers, our country will experience greater growth, and it confirms, however, that the industry is behaving much better than services, which are greatly affected by the limitations on activity and mobility.
«Manufacturing activity indicators continue to recover, but services registered a more pronounced fall, due to the new containment measures», He highlights.
The ERTE exit slows
Regarding the labor market, next year our country will have the second highest unemployment rate of the countries analyzed: 17.4%, only surpassed by 17.8% in Greece. By 2020, he believes that unemployment will end at 15.8% thanks, in part, to ERTE. «The number of workers still at ERTE in October represented 18% of the April peak. But nevertheless, the exit pace has slowed, and the remaining workers are concentrated in the sectors and regions most affected by the crisis, “he says.
Among the risks that can further sink the economy, the OECD cites “more persistent effects on the solvency of households and companies.” “A prolongation of the crisis can push viable companies into insolvency”, concludes the OECD.
The new measures, in the words of the institution, should help those most affected by the new confinements, claims the OECD, in addition to promoting retraining among workers affected by ERTE. The body, in short, calls the Government to continue with protective measures, in addition to approving reforms that raise productivity and confront the “fragmentation” of the internal market.
In any case, the impact on public coffers will materialize with a deficit of 11.7% this year, 9% next year and 6.6% still in 2022, which will lead to public debt soaring to 117.3 % of GDP this year. Despite the growth, it will continue to increase in 2021 (120.5%) and 2022 (122.4%), as long as the gap in public accounts is not closed. This is the largest deficit in the Eurozone.
Reform of the Second Chance Law
The OECD calls for broader second-chance laws for entrepreneurs who have gone bankrupt due to the crisis and want to re-float their business or create a new one, through “the exemption from paying the debt incurred with future liquidation income ». And it reveals that the Executive contemplates some of these measures.
‘Many countries are already reducing the time to re-register without past obligations to three years to be in line with the EU Insolvency and Second Chance Directive (eg Germany), but they could try to speed up this part of the reform, which can facilitate restructuring (for example, Spain is considering this option), ‘says the OECD.