Spain in 2020: How the Getting off to a Good Start Has Turned into a Crisis

Spain in 2020: How the Getting off to a Good Start Has Turned into a Crisis

As in Spain, other governments first reacted to the COVID-19 outbreak as an external threat. While the delay on the lockdown announcement is the generalized case scenario, some nations have a higher level of alert than others. Until January, the authorities claimed a “virus-free” country that, as we know now, was far from the reality of this side of the Iberian Peninsula.

Is 2020 a ‘Lost Year’ in terms of the GDP?

On April 26th, the nationwide most restrictive phase I of the state of alert ends. What comes next? The less restrictive phase 2 or “level 1” period, lasting until May 10th, allowing short walks and 1-hour exercising sessions outdoors, will follow. Then, from May 11th to May 24th, phase 3 is the level 2 reduced state of alert that will allow displacements without due justification. However, gatherings, meetings, and some restrictions will go on. Social distancing remains a must in these phases. 

Forecasts estimate that non-essential commerces will not resume their activities before late May. A nearly 2.5-month halt of regular economic transactions is never good for business. To make it worse, mid-to-small establishments add up for the gross of the Spanish economy. Since rents postponements or reductions are optional unless large-scale landlords, several businesses must face the bill despite the lockdown. In some niches, like restoration, the comeback to the regular activities will be restricted and slowed down due to distrust.

The Weirdest Summer of Recent History

In Spain, summer is a synonym of terraces in bars and restaurants, thousands of tourists looking for destinations, plenty of time spent on outdoor group activities, and sun. This year, we may see deserted cafeterias, nearly-empty streets, and people working out lonely, though. Unlike regular years, beaches will be unpopulated, hotels not fully-booked, and people may only try wary national tourism. The pandemic has struck the person-to-person third sector activities in mass. Many of them will not reopen in phase 3.

A Long-Lasting Toll in Spain’s Economy

The mortgage bubble crisis of 2008 set the markets back for some quarters. While some experts claim the current crisis to be worse, only time will show how deep this recession will be. On one side, consumers will turn to online services to maintain some level of regularity in their lifestyles. Large companies like Amazon and Uber are making a profit with deliveries these days. However, smaller companies without automation could not respond to this change. The adapt-or-die law of businesses is leaving many behind.

The Rise of Remote Working in Spain

Not everything is bad news, though. As some sectors sink, others rise as foam. Online services are in high demand, such as e-commerce stores, food delivery providers, and videoconference. Figures point out that Zoom, an alternative to Skype or Hangouts, had 10 million users last Dec. Their userbase skyrocketed to 200 m. almost overnight due to the need for remote meetings, causing some issues to arise in the application. Despite the controversy, most people can make do with this service.

The 9-to-5 routine in the office is halted until later phases of the state of alert. Therefore, many companies have moved their activities to the remote. Office duties can be transferred to the corporate cloud without much disruption. The largest tech giants (Google, Microsoft, etc.) are cashing in more income for their all-in-one suites. But, this revenue leaves Spain since most of these companies pay taxes in Ireland or elsewhere abroad. Thus, we have yet another concerning factor decreasing the country’s GDP in 2020.