The INE confirms the historical collapse of the GDP: it fell by 5.2% until March due to Covid-19

The INE confirms the historical collapse of the GDP: it fell by 5.2% until March due to Covid-19

With the sharp decline in GDP in the first quarter, Spain is on the verge of recession

The INE confirms the historical collapse of the GDP: it fell by 5.2% until March due to Covid-19

The Spanish economy suffered the impact of the Covid-19 coronavirus crisis and fell by 5.2% in the first quarter, its largest quarterly crash recorded in the historical series of the National Institute of Statistics (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 National Accounts data for the first quarter, similar to those advanced at the end of April.

With the sharp decline in GDP in the first quarter, Spain is on the verge of recession , since for an economy to enter what is considered a technical recession, two consecutive quarters of negative growth are required. In any case, a contraction of GDP in the second quarter is taken for granted , greater than that of the first, because the April-June period was affected by the paralysis of numerous economic activities as a result of the declaration of the state of alarm .

In the three preceding quarters (second, third and fourth quarters of 2019), the Spanish economy had been growing at rates of 0.4%.

In a year- on- year rate , GDP for the first quarter contracted by 4.1%, compared to the 1.8% rise in the previous quarter. This is the biggest setback since the second quarter of 2009, when the Spanish economy contracted 4.4% year-on-year . No negative GDP data was recorded since late 2013.

Domestic demand subtracted 3.7 points from the year-on-year variation of GDP in the first quarter, 5 points lower than that of the fourth quarter. For its part, external demand subtracted 0.4 points, nine tenths less than in the previous quarter.

Quarterly data show a drop in household consumption of 6.6% , compared to 0.1% growth in the previous quarter. On the contrary, public spending stepped on the accelerator between January and March and grew by 1.8%, its highest increase in twelve years, specifically since the first quarter of 2008. For its part, consumer spending by non-profit institutions Profit and household service 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 hours actually worked, more relevant at the present time when it comes to measuring the evolution of employment. “It is considered that this variable, compared to full-time equivalent jobs, is the one that most clearly reflects the effects induced on employment by the Covid-19 outbreak and the successive measures adopted,” he says.

Employment in the economy , in terms of hours worked, fell 5% in the first quarter compared to the previous quarter. This rate is smaller 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 average hours full time (-3.1%).

In year-on-year terms, hours worked decreased by 4.2% , a rate 5.6 points lower than that of the fourth quarter of 2019. For their part, full-time equivalent positions fell by 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.

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