The latest forecasts launched by the BBVA Research Regional Observatory for the fourth quarter confirm what many of us have been commenting and announcing for months. The bank’s research service is offering its forecasts on the impact of the pandemic on the various regional economies. These forecasts, after being analyzed, show this asymmetric shock, which, based on the impact of such an intense deterioration of the tourism sector in the country, shows how the forecasts are more pessimistic in those economies that depend more on this sector.

This is how BBVA Research concludes the update of its report, making reference to this greater deterioration of the economies of the Mediterranean basin, due to their high dependence on one of the sectors most affected by the pandemic, tourism. In this sense, we cannot forget about the islands, where tourism intensifies its presence, thus conditioning the Balearic economy, or the Canary Islands’ economy, in an excessive way. We must bear in mind that we are talking about economies which, in this case, base almost half of their GDP on a tourist sector which, in the light of the forecasts, is expected to contract in a way that has never been seen before.

Thus, the forecasts made by the tourist industry association Exceltur predict that the sector will register losses of up to 92,000 million euros. Losses that could worsen, depending on the behavior of a crisis, which has no precedent, while it is unknown the possible behavior that will experience the pandemic in the future, gives the nature of this crisis. In this regard, we would speak of a deterioration that could increase losses to as much as In any case, the employers are already talking about a lost year for tourism, as they foresee a fall in income which, according to their forecasts, stands at 81%.

In this context, the statistics that we have been analysing, unfortunately, encourage that pessimism that, on the other hand, reflects the tourism employers. As headlines are released, in which the tourist activity in the country is recorded, the data is increasingly worrying. Well, according to the forecasts that we mentioned of the employers, the great dependence of the country on the tourism sector, which has gone from being a strength to a great weakness at times like this, has caused that, in a scenario in which the GDP contracts by 11%, as shown by the forecast offered by the Bank of Spain, 57% of this contraction would be justified by the losses of the tourism sector, ie a contraction in which tourism plays a key role.

Moreover, as I said, the headlines we mentioned do not encourage members of the sector, which, as the statistics show in contrast to previous years, already register decreases in certain key indicators, such as hotel occupancy, of up to 90%. If this trend continues in the coming months until the end of the year, it will leave nearly 40 billion euros that, given the situation, the sector would not be generating. All this, with its consequent effects on the economy, where, as we said, the tourism sector, taking into account its contribution, both direct and indirect, supports about 25% of Spanish GDP, as of 2019.

In addition, another worrying aspect that is being highlighted is the contribution of the tourism sector to employment. At present, the sector contributes, directly and indirectly, to employment with 14.7% of total employment. Moreover, since 2013, tourism has been responsible for generating 20% of all new employment created from that year onwards. All of this, with a seasonality that stands at 32%, is of great concern to the sector, as well as to the population in general. For, when we speak of a sector with such weight in the economy, any deterioration that it suffers will inevitably have an impact on the economy. In this case, as Spain is one of the world’s leading powers, as well as taking into account that we are talking about a sector that is the main source of income from exports of services in the country, we are talking about an impact that, as we mentioned, justifies more than 50% of the contraction forecast for the GDP in this 2020.

Finally, it is also worth noting the commitment of the Spanish Government to encourage the tourism sector with the national tourist. The aim is to make up for the losses expected this year due to the non-arrival of foreign tourists. However, it should be clarified that we are talking about a domestic tourism that, analyzed objectively, already represents 90% of the tourism activity that the country registers. In other words, we are talking about an aggregate of 9.8% which, in millions of euros, would not exceed 4 or 5 billion euros. All this, because while the foreigner contributes more than 70,000 million, the domestic, in the sum, does not reach 35,000 million. Foreign tourism contributes the most to this sector, which is vital for our economy.


Francisco Coll MoralesEconomist

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