SUNNY STATE LOCKDOWN PAINS
Monita Pesumal journeys through a socioeconomic trail of a country that bridges Europe and Africa
With sunshine, sangria, siestas and numerous fiestas, the Kingdom of Spain is the second largest country in the EU after France. But red wine, sweet guitar string music and flamenco dancers are probably far from the minds of the nation’s central lenders as the Bank of Spain has forecast a fall in GDP of up to 15.1 percent due to the effects of the COVID-19 pandemic.
Spain’s central bank has also warned that the economy will not return to pre-crisis levels until at least 2022.
In mid-March, Spain was crippled by one of the world’s strictest lockdowns. And in May, the Governor of the Bank of Spain Pablo Hernández de Cos reportedly informed parliament that “the length of the shock is likely to be longer than we initially anticipated; and the longer it lasts, the more likely it is to cause persistent damage to the economy.”
Battling one of the worst downturns on record in the first quarter, the economy is set to reel even further in the second quarter as the brunt of the coronavirus containment measures are felt. With shopping malls, sports venues, gyms, restaurants and offices closed during the peak of the pandemic, tourism, hospitality, transportation and retail – which account for 25 percent of GDP – have suffered the most.
The Bank of Spain expects the country’s debt-to-GDP ratio to rise beyond 120 percent from a previous level of slightly under 100 percent with a budget deficit of up to 11 percent this year in a worst case scenario.
According to the central lender’s estimates, Spain’s deficit was only around three percent of GDP at the beginning of the coronavirus crisis. Other economists argue that a 10 percent drop in output and a deficit of 10 percent of GDP are likely.
Spain has battled with mega-high unemployment over the years and it was one of the remnants of the sovereign debt crisis of 2011. During the peak of that crisis, over 26 percent of the Spanish working population were out of a job.
Unemployment in Spain was already 14 percent before the pandemic hit. According to media reports, social security figures indicate that more than 800,000 people from a labour force of around 19 million have already lost their jobs. The latest World Economic Outlook warns that the unemployment rate could reach 20.8 percent – an increase from an October forecast of 13.2 percent.
Madrid announced an immediate fiscal stimulus package with the government supporting the income of approximately six million people through temporary layoff schemes, tax holidays or increased benefits.
Under Spain’s government approved basic monthly income scheme for example, a minimum income of EUR 462 a month is guaranteed for a single person with this sum increasing with the number of family members to a monthly maximum of 1,105 euros.
Prime Minister Pedro Sánchez’s government will top up existing revenue streams including salaries and most social benefits to ensure that households reach this minimum income level every month.
Spanish nationals and people with at least a year’s legal residency aged between 23 and 65 years (or over 18 years if they are supporting a child) whose income is below the minimum level in the scheme can benefit from this state poverty alleviation initiative.
Spain has the second highest life expectancy of all countries after Japan, at an impressive 83 years. Although the UN projects that it will have one of the oldest populations in the world by 2050, Spain is on track to have the world’s longest life expectancy by 2040 with a lifespan of 85.8 years – thus surpassing Japan.
The country spends about 10 percent of its GDP on healthcare. According to the Bloomberg Global Health Index, the top five healthiest nations were Spain, Italy, Iceland, Japan and Switzerland.
Spaniards owe their good health and longevity to positive lifestyle choices such as outdoor exercise and the consumption of less processed food.
It is no secret that the Mediterranean diet is filled with healthy fats and legumes, seafood, fruits and vegetables. On average, a Spanish person consumes nearly three gallons of alcohol a year, which is twice the global average. However, contrary to popu-lar belief, 31 percent of the population does not drink at all.
Moreover, Spaniards walk almost everywhere possible. Spain has one of the highest percentages of walkers in Europe with 37 percent of them walking to work instead of driving.
With its diverse landscapes and regions, some 45 World Heritage sites, and a melting pot of European and African cultures, it’s no surprise that Spain is one of the most popular tourist destinations on Earth. It was the world’s second most popular tourist destination in 2018 after France, attracting a mam-moth 82.8 million visitors.
In the south of Spain, tourism – which accounts for a large chunk of the economy – was on hold for some three months although the country is beginning to reopen its borders to other European nations.