The paralysis of the economy costs Spain 20,000 million a week


Berlin correspondent

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Although the Spanish government has not released its calculation on the invoice for the paralysis of the economy, there are institutions that are doing the math. Every week with the economy paralyzed it costs Spain up toto 20,000 million a week, according to the Munich Institute for Economic Research (IFO), which considers that the stop of non-essential economic activity in Spain, decreed to try to contain the spread of the Covid-19 pandemic, will mean weekly a loss of between 0.8% and 1.6% of GDP.

Projecting that calculation and assuming that the parenthesis of economic activity reached two months, would have a negative impact of between 101,000 and 171,000 million euros in our economy, subtracting between 8.1% and 13.8% percentage points from GDP growth. And if the paralysis is extended three months, The Economic cost would be between 141,000 and 250,000 million euros, with the loss of between 11.3% and 20% of GDP.

In the opinion of IFO President Clement Fuest, it would be necessary to study formulas in which protection against coronavirus and economic activity can be combined. "There is an urgent need for companies to adopt measures combining the resumption of activity with containment of the epidemic because, if they remain closed for more than a month, the loss of activity will quickly reach dimensions far beyond the collapses of previous crises or natural disasters in the history of the EU ”. Fuest considers that since World War II there was no comparable situation of paralysis and it will affect more the countries that paralyze their economy for a longer time. "Every week counts," he admits.

The dramatic situation is not, of course, exclusive to Spain, but affects in a very similar way the rest of the European economies analyzed. For Italy, estimates that each week of paralysis involves between 14,000 and 27,000 million euros, with the loss of between 0.8% and 1.5% of GDP, which would lead to an adverse impact of between 143,000 and 234,000 million in two months, that is, between 8% and 13% of GDP, and between 200,000 and 342,000 million at three months, with an 11.2% to 19.1% loss of GDP.

In France the weekly cost is between 18,000 and 35,000 million euros, loss of between 0.7% and 1.4% of GDP. In two months 298,000 million, 12.3% of GDP. In three months between 247,000 and 436,000 million, with a loss of between 10.2% and 18% annual GDP.

UK will take a toll of between 9,000 and 38,000 million per week, from 0.8% to 1.5%. In two months, it will be between 193,000 and 328,000 million, 7.7% to 13% of GDP, and in three months between 271,000 and 480,000 million, with a loss of 10.7% to 19% of GDP.

Germany does not escape disaster. As the IFO Institute had already advanced last week, the announced measures will cost in this country some 729,000 million euros in the worst scenario expected and the destruction of almost one and a half million full-time jobs, despite the enormous resources destined to finance the reduction in working hours, with a loss of 20.6% of annual GDP. If Germany were to reduce the paralysis to two months, the costs would range between 255,000 and 495,000 million, between 7.2% and 11.2% of GDP. Each week represents an additional cost of between 25,000 and 57,000 million, between 0.7% and 1.6% GDP.

The time of paralysis, however, does not only depend on the time that governments prolong the measures, but also of the impulse that the investment takes and, as the IFO Institute has verified, this part may involve added damages. The confidence of German businessmen fell in March to its lowest level since 2009, according to the indicator prepared by this institute, from 96.0 points in February to 86.1. "It is the steepest decline on record since reunification German and the lowest value since July 2009 ", values ​​Clemens Fuest, who describes that" the German economy is in a state of 'shock', expectations among managers have been clouded in a way never seen before and the assessment they make of the economic situation has worsened dramatically ».

And in the IFO calculations, several sectors that are particularly affected by the coronavirus crisis stand out. In the imanufacturing industryThe index fell to its lowest level since August 2009, while the Expectations subindex registered the steepest drop in 70 years of industry surveys. Ifo economist Klaus Wohlrabe predicts "a severe recession in Europe's largest economy which will last at least two quarters »and which will have an impact on the challenge of Europe, especially in industry and tourism.

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