Spain: Second estimate confirms economy contracted at historic pace in Q1
June 30, 2020
A second GDP estimate released by the National Statistics Institute (INE) on 30 June confirmed that the economy suffered its worst downturn on record in the first quarter, battered by the initial effects of the Covid-19 outbreak and associated containment measures. Economic activity plummeted a seasonally-adjusted 5.2% from the previous quarter in Q1, matching the preliminary estimate and contrasting the 0.4% expansion recorded in Q4 2019. In annual terms, the economy shrank 4.1% in Q1 (Q4 2019: +1.8% yoy), the most since the 2009 global financial crisis.
Consumer spending tanked 6.6% quarter-on-quarter (previously reported: -7.5% qoq; Q4 2019: +0.1% qoq) as lockdown measures that began in mid-March closed non-essential businesses and extinguished consumption, while fixed investment collapsed 5.7% (previously reported: -5.8% qoq; Q4 2019: -1.2% qoq). In contrast, public spending rose a strong 1.8% on the government’s response to tackle the health crisis (Q4 2019: +0.7% qoq).
On the external front, exports of goods and services dove 8.2% (previously reported: -8.4% qoq; Q4 2019: +0.6% qoq) as the pandemic shut down foreign demand, while imports plunged 6.6% on depressed domestic demand (previously reported: -8.4% qoq; Q4 2019: -0.8% qoq). Taken together, net trade subtracted from the headline reading, after making a sizeable contribution to growth in Q4 2019.
Author: Javier Colato, Economist