As has already been announced by various bodies, both national and international, the recovery expected for the Spanish economy after the dissipation of the pandemic will be, from the outset, very gradual. That is, the “V” recovery that some expected for the Spanish economy, as already announced by these organizations, having to include the Government itself among them, will not be, finally, a foreseen scenario. Given the prolongation of the social distancing measures, the immediate reactivation of the Spanish economy has not been a possible phenomenon in view of the nature of an unprecedented crisis.
In this sense, the recovery will not only be gradual, but, in view of the measures adopted by the Government, it will also be heterogeneous, depending on each territory and the sectors that comprise it. Given that the recovery is being carried out by phases of de-escalation, the diversity of phases, as well as their application in the different territories is occurring unevenly. Depending on the health markers, as well as the containment of the pandemic in each territory, one territory may present a certain phase, while another, due to the indicators it shows, may be in previous phases.
This is reflected in a study carried out by the Banco de España, which shows how a series of autonomous regions in the country, due to their situation and economic structure, will find it more difficult to recover from the situation. Always bearing in mind that we are talking about autonomous territories, since, as we know, if we speak in a national key, the forecasts for the country in this aspect are quite clear. This is reflected by the Bank of Spain, among other bodies, which is forecasting a situation for the Spanish economy which, as the indicators show, shows a widening of imbalances which, despite having already started, are now very much deteriorated by the situation.
I am referring to debt levels which, based on the forecasts, are 122% of GDP; we are talking about a deficit which is already forecast to exceed 10%, reaching levels of 11%; as well as an unemployment rate which, in the best of cases, is forecast to be 20%. However, as we said, we are talking about autonomies and territories, where recovery is very uneven, given that this recovery depends on how open these autonomies are, as well as, and this must be taken into account, the set of sectors, and their exposure to the pandemic, that make up this territory.
Therefore, taking into account that one of the sectors most affected by the situation has been the tourism sector, the Banco de España already anticipates that those economies that, due to the nature of these, as well as their economic structure, have a large part of their economy subordinated to the tourism sector, after the dissipation of the pandemic, could experience a more gradual recovery, even, than the recovery foreseen for the country as a whole. The fact is that, given the inability to compensate for these losses with other sectors, certain autonomies are left stranded and unable to cope with the situation that is approaching.
In this respect, we are talking about autonomous regions such as the Balearic Islands or the Canary Islands. Both regions, in line with the above, have an economic structure that is worryingly dependent on the tourism sector. A situation which, despite having been warned by all the experts – including myself – is presented as a great threat to economic recovery in certain territories. And when we are talking about economies in which the tourism sector is so large that both economies depend on the tourism sector by more than 35%, in the smallest case, taking into account that this sector is the most affected by the pandemic, the forecasts are quite clear-sighted.
As I was saying, at this time, the Spanish economy presents a GDP that in its structure, including auxiliary services and sectors added to this sector, depends on the tourism sector by 25%. Thus, the Canary Islands and the Balearic Islands, in contrast, present, respectively, 35% and 45% of their GDP dependent on that sector. If we add to this the fact that this sector also conditions nearly 30% of the labor force -even increasing due to the 32% of seasonality that the sector presents in the country-, the situation, although still as a forecast, is very complicated.
Taking into account the losses estimated by Hosteltur, the tourism sector could be left with more than 72 billion euros. With these data, making the estimate based on the corresponding losses for regions such as the Balearic Islands or the Canary Islands, we can see how, taking into account the contribution of the Canary Islands’ economy to the tourism sector and distributing this loss, based on the weight of each economy in this sector, the Canary Islands could lose more than 7,000 million euros due to the situation shown, taking into account that the recovery occurs in the month of July. If we take into account that this recovery is prolonged and that the losses amount to the 92,000 million euros expected, the loss for this autonomy could reach nearly 10,000 million euros.
Thus, making the same calculation for the Balearic Islands, in an optimistic scenario in which losses are stabilized in July, the islands could be left, likewise, more than 7,000 million with the dissipation of the pandemic. If the pandemic spreads, as it did in the Canary Islands, the losses would be slightly more than 9,000 million euros. In this sense, losses which, taking into account the tourism GDP of each autonomous region in absolute values, in the best of cases would mean decreases in the tourism GDP of -48.76% in the case of the Balearic Islands, as well as a decrease of 48.75% in the case of the Canary Islands. And, as I said, taking into account the most optimistic scenario.
In this sense, as we see, the losses for the sector reduce the tourism GDP by almost 50%, with the consequent impact on employment and hiring. This is something to be taken into account, because if instead of taking into account those economies that are more tourist, we take into account other economies such as Catalonia, with its contribution, taking into account that the decrease is also around 50% of the value of its tourist GDP, the losses, due to its greater monetary contribution to the national tourist GDP, amount to more than 13,000 million euros. In this sense, losses that are only observed in the tourism sector, without taking into account the damage to other sectors that, like tourism, can be quantified.
For this reason, this impact is not only bad for the economy, but for some, in the case of the above-mentioned, it is devastating. To continue without a defined strategy in this regard, as well as without the provision of resources and guarantees to move the sector forward, is to condemn economically many of the Spanish autonomies that, because of the situation and their structure, are incapable of acting and making decisions.
And, with this, we must stress that we are not talking about an isolated case either, since other economies such as Italy, France or other tourist powers in the world will have to face very similar situations.
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Francisco Coll MoralesEconomist
