The second quarter GDP results show the strong deterioration of the Spanish economy due to the impact on activity and employment of the Covid-19 crisis.
The drop in GDP of -18.5% quarter-on-quarter marks a record high. This deterioration is compatible with CEOE's forecasts for the year as a whole greater than -10%. It should also be noted that this is a specific piece of information that reflects an atypical situation and, therefore, not comparable with other previous crises.
The decline in activity in Spain is much greater than that registered in the countries in our environment: Euro Zone (-12.1%), Germany (-10.1%), France (-13.8%), Italy (- 12.4%). This result is mainly explained by the characteristics of our productive and business structure in a context of greater measures of confinement and restriction of activity.
The notable contraction in activity has occurred both from the side of domestic demand and from the foreign sector, the only exception being the consumption of public administrations.
From the point of view of domestic demand, the drop in household consumption stands out (-21.2% quarter-on-quarter). In addition, business investment has had a particularly adverse behavior (-22.3% quarter-on-quarter). At this juncture, it is essential to reduce uncertainty and improve confidence, favoring the business climate and the ability of companies to adapt to the new context.
On the side of the foreign sector, the significant decrease in exports stands out, mainly in its services component, very affected by the collapse of the influx of tourists. The foreign sector must be a lever for recovery, as it has been in previous crises, so measures that favor the internationalization of the Spanish economy and competitiveness must be carried out.
All sectors have reduced their activity in an intense way, except agriculture (including the food chain) and financial and insurance activities. It is obligatory to recognize the efforts of these sectors, guaranteeing the food supply and facilitating financing and insurance, at such an adverse moment.
The drop in hours worked (-21.4% quarter-on-quarter) reflects more clearly than other statistics the effect on employment of this crisis, regardless of the contractual and / or administrative situation of workers.
Surprisingly, given the situation in the labor market, unit labor costs and compensation per employee have shown such significant growth (8.7% and 3.9%, respectively). From this it follows that a decoupling of labor costs may be taking place in relation to the economic situation. This fact, if it persists in the coming quarters, may pose a risk for the recovery of employment and activity.
The unprecedented contraction in gross operating surplus (-26.0% year-on-year) is worrying, reflecting the dramatic situation of companies and the difficulties they are experiencing. In this sense, it is necessary to maintain and intensify measures to support the productive fabric so as not to jeopardize its survival. In this regard, it is worth remembering that, if companies do not recover, it is not possible to normalize economic activity.