The Spanish economy accused the impact of the coronavirus crisis and fell 5.2% in the first quarter, its largest quarterly decline recorded in the historical series of the National Statistics Institute (INE), which starts in 1970. Until now, the largest quarterly drop in GDP was in the first quarter of 2009 (-2.6%). This has been confirmed by Statistics with the publication of the National Accounts data for the first quarter, similar to those advanced in late April.
With the sharp drop in GDP in the first quarter, Spain is looming in recessionBecause two consecutive quarters of negative growth are required for an economy to enter what is considered a technical recession. In any case, a contraction of GDP in the second quarter, greater than that of the first, is taken for granted, because the April-June period was affected by the stoppage of numerous economic activities as a result of the declaration of the state of alarm . In the three preceding quarters (second, third and fourth quarter of 2019), the Spanish economy had been growing at rates of 0.4%.
In year-on-year rate, the GDP of the first quarter contracted 4.1%, compared to the 1.8% rise in the previous quarter. This is the biggest decline since the second quarter of 2009, when the Spanish economy contracted 4.4% year-on-year. No negative GDP data was recorded since the end of 2013.
National demand subtracted 3.7 points from the year-on-year change in GDP in the first quarter, 5 points lower than in the fourth quarter. For its part, external demand subtracted 0.4 points, nine tenths less than in the last quarter.
Quarterly data shows a drop in household consumption of 6.6%, compared to 0.1% growth in the previous quarter. Conversely, public spending hit the gas between January and March and grew by 1.8%, its highest rise in twelve years, specifically since the first quarter of 2008. For its part, consumption spending by non-profit institutions and at the service of households increased by 0.8% , five tenths more than in the previous quarter.
Investment, on the other hand, registered its biggest drop in eleven years in the first quarter (since the second quarter of 2009), falling by 5.7% between January and March.
The INE points out that the situation caused by the coronavirus makes certain variables, such as the hours actually worked, more relevant at the present time when measuring the evolution of employment. “This variable, compared to equivalent full-time jobs, is considered to be the one that most clearly reflects the employment-induced effects of the Covid-19 outbreak and the subsequent measures taken,” he points out.
Employment in the economy, in terms of hours worked, fell in the first quarter 5% compared to to the previous quarter. This rate is less than that of full-time equivalent jobs (-1.9%, which is 2.8 points less than in the fourth quarter) due to the reduction observed in the average hours. full-time (-3.1%).
In year-on-year terms, hours worked decreased 4.2%, a rate 5.6 points lower than that of the fourth quarter of 2019. Meanwhile, equivalent full-time positions decreased 0.6%, 2.6 points less than in the fourth quarter, which means that 102,000 full-time equivalent jobs have been destroyed in one year.