Spain expects GDP to recover by up to 19% in the summer. How do you eat it

The Spanish central bank Bank of Spain expects GDP to recover by up to 19% in the third quarter. Which may be a surprise at first glance, because half the world says the crisis will be worse than expected. For example, the European Commission is not very optimistic and has recently had to adjust its numbers. The estimates in the second quarter of the year were serious, but with the arrival of new data, they became somewhat more serious. Spain, Italy and France are the three countries most affected by the crisis in Europe. Well, this jump is so big, then what does it mean?

In situations like the current one, we have to be particularly careful with our opinions. The analyst may be tempted to deal with oversized crises. It’s not uncommon for people to tend to exaggerate in times of crisis. And in a time of plenty there is a tendency to be overly optimistic. Why, surely The most complex periods are the recovery periods because there are too many mixed signals. And these signs pull us from both sides at the same time. At times like this, it’s very easy to get things wrong.

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Spain expects GDP to recover by up to 19% in the summer. How do you eat it
Spain expects GDP to recover by up to 19% in the summer. How do you eat it

Well, there are many contradictions in transitional periods. And it is these mixed signals and conflicting messages that make it very difficult to weigh the situation as a minimum of objectivity. For example, the financial markets have recovered faster. But the reality on the street is very different. Spain’s worst detention weeks saw the largest economic decline ever in its history. The unemployment rate has skyrocketed and ordinary Spaniards are not having a good time. Different entities expect a slow and painful recovery. In fact, many believe that things will be relatively normal again in the middle of next year. This is the most optimistic position.

Of course, all of these reports and estimates do not take into account the outbreaks or the possibility of a new restriction. This is completely ignored because it is almost impossible to predict all variables in the game. So these reports are based on the assumption that there will be no new locks. But good, What does this jump mean? This recovery is the result of a lack of trust and the start of the summer vacation season. Very important in Spain. It’s that simple. People have been jailed for quarantine, which of course has resulted in a dramatic decrease in spending, but now that everything is reopening, spending is increasing. That doesn’t mean we’re the same as before, but we’re a little bit better than in the toughest weeks of detention.

Here are some details about the recovery numbers. And this is a phenomenon that occurs too often in the Bitcoin market. I mean the following: S.If the price of an asset falls 50% and then recovers from returning to the original price, it would be absurd to say that we are in a bullish season as a 100% increase has just been registered. Because if an asset falls by 50% and then increases by 100%, the growth is 0%. If a sly mind managed to buy below and sell above during the economic cycle, it naturally made its December. However, this candy is the product of the temporary volatility of the event and not an inversion of the market trend. This does not mean that the trend has reversed and that we are now officially in the bullish season. one00% looks like a lot. In reality, however, it’s an easy return to the previous level.

Back to Spain. An annual economic decline of at least 10.9% is expected. Spain is below the European average of 8.7%. And under Germany you only see a decline of 6.3%. Only Italy outperformed Spain by 11.2%. This is about negative growth.

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The thing is like that. If we look at the last quarter of 2019 as our 100%, the economy fell to 94.8% in the first quarter of 2020. In other words, it declined by 5.2%. Then the economy fell to 79.8% in the second quarter. In other words, it was down 15%. According to these estimates, with this potential recovery of 19% for the third quarter of 79.8%, we could be 94.8%. It would add 15%. Not 19%. Elementary, Watson!

Of course, the fourth quarter would be responsible for giving the final boost and officially closing the year in recession. Theoretically, the year should end at 89.9% of our 100% (2019), which corresponds to the 10.7% decline set for 2020. So it seems that July, August and September will be the best of the year.

OKAY. And what’s the use of knowing that? What is the use of all this macroeconomic data and all these estimates? Well, at government level it is relevant when a plan, budget, or measure is drafted. As inaccurate as the data and estimates may be at times, it’s all we have to make decisions. That could tell us that the government should distribute more aid by autumn. And these discussions will take place in the summer months.

For people like us, this is also relevant because it can help us with planning. Above all, it is important to examine the numbers of the individual sectors. Tourism, hotels, trade, art and leisure are the most affected. However, construction and some factories will also be seriously affected, as this has severely disrupted the international distribution chains. Obviously, the situation affects these sectors because of their dependence on foreign countries. Many of his inputs do not come from the national market.

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On the other hand, we have the primary sector such as agriculture, banking and insurance and many industries that will feel a slight blow. Not long, but a little. The same applies to areas. Not all regions are affected equally. During this crisis, tourism-dependent and foreign sectors will feel the storm somewhat more strongly, while somewhat more autonomous regions with more self-sufficient economies will be relatively better off.

Of course, we cannot forget that every crisis is an opportunity. Tour operators will surely offer great offers and special packages. And many stores offer discounts. There are also purchase options. As well as new companies as a result of economic restructuring. At the moment, many are looking for ways to fill the void left by foreign products they couldn’t carry. This new economic nationalism, which is expected for a time after the corona virus, opens the doors to local production in many areas. Crises should not drown us in worry. Crises are opportunities and phases of transformation. It’s just about working harder.

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