September 26, 2020

Mapfre foresees up to three years of recession in Spain if there is a regrowth


Madrid

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Mapfre manages economic forecasts that are not very hopeful for the Spanish economy. The insurer’s research service calculates a fall in GDP of 12.1% this year and a rebound of 6.8% for 2021, in a base scenario. On the other hand, in a stressed scenario, as they call it, the collapse for this exercise would be 13.1% … and the recession would also extend to the next, with a decrease of 1.2%. Even, as the Mapfre experts have reflected in a virtual press conference, in the event of regrowth and poor management, it is not ruled out to continue in negative rates also in 2022.

He Bank of Spain, BBVA, Funcas … none of them augurs two years of recession in our country. Mapfre has more pessimistic projections for the coming year if a more adverse picture were to emerge. Private consumption and investment would be the cause of this bad data for 2021, with falls of 5.2% and 9.2%, respectively, under a scenario of a re-emergence of the pandemic.

In the base scenario, the GDP drop which Mapfre calculates by quarters would be 25.5% from April to June; from 10.5% from July to September; and a little more than 8% from October to December. In this case, the rebound in the economy would occur in the second and third quarters of 2021 (19% and 4.5%, respectively).

However, the picture is different in the most adverse scenario. The forecasts in 2020 are very similar in both scenarios. But in 2021, on the other hand, the fall would be 14% in the first trimester. These last calculations are made thinking about a bad management of the pandemic, with uncoordinated public policies and a return to home confinement.

The debt problem

Likewise, the insurer warns that the public debt this exercise could already exceed 124% of GDP. And it places special emphasis on the need to monitor private leverage levels (companies and households). Precisely the debt of the latter, according to data from the Bank of Spain, stood at 129.9% of GDP in the first quarter. Some data that is expected to continue increasing with the increase in credit granted by banks thanks to ICO guarantees. The public deficit, if any, could soar this year to 13%, the report says.

In the case of unemployment, Mapfre estimates a range of 17.2% and 20.4% in the baseline and stressed scenario for 2020, respectively. Thinking of 2021, the differences expand from 14.4% to 21.5%; Continuing in recession next year would also lead to continuing to see increases in unemployment.

Entering into sectoral matters, the entity predicts that the insurance business it will also be strongly affected this year by the pandemic. If GDP falls, so do premiums. His estimate in this case is to see declines similar to those of the last crisis between 2009 and 2012. “GDP experienced falls of 3.8% and 3% in 2009 and 2012, respectively, which led to a decline in the insurance sector premiums of 8.8% and 7.4% in 2010 and 2012, respectively, affecting in particular the Life business, but also auto insurance, industrial multi-risk, civil liability, transport (helmets and merchandise) and credit insurance, ”says the Mapfre report.

Despite this, from the firm they point out that once the recovery period has arrived, it would be reasonable to think that there is also a high rebound in the business. In fact, the insurer defends that, traditionally, in recovery phases, the sector usually recovers faster than the economy as a whole.

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