Spain, among the countries worst prepared for the post-covid recovery

Spain is below other neighboring countries such as France, Germany or the United Kingdom in terms of its ability to recover from the great economic crisis derived from the pandemic due to its lack of digitization and foreign investment, among other causes. This is predicted by the competitiveness report published this Wednesday World Economic Forum, and that positions Spain in twentieth place of the 37 study countries.

To establish this classification, the organization measures eleven factors such as the digitization of the market, the maturity of the health networks, the openness to foreign investment, the confidence of citizens in the institutions, the energy transition or the updating of education for the jobs of tomorrow. Among them, Spain only has one good score in opening your market to national and international competitiveness, where it occupies the sixth position, and in relation to adaptation to new technologies, where it is seventh. However, in categories such as R + D or the progressivity of taxes remains below the approved one.

The best positioned to recover and adapt to the world after the pandemic are Finland, Sweden, Denmark, the Netherlands and China.

More restrictions at Christmas

In addition, the recovery in 2021 may be hampered by the imposition of more severe restrictions due to the increase in infections in recent days. These new measures that affect the mobility or the opening of businesses at Christmas «will weigh on the economic recovery» of 2021, warned this Wednesday the experts of Funcas, since December greatly influences the GDP data for the fourth quarter, which in turn will impact the first of next year.

For 2021 the agency estimates a GDP growth of 6.8% mainly due to mass vaccination and the arrival of European funds, to which is added the maintenance of low interest rates by the European Central Bank (ECB) in principle until 2022.

But the lack of tourists will continue to weigh heavily. Although Funcas foresees that 40% of international visitors will recover in 2021, a large volume compared to 10% in 2020, we will still be very far from the 2019 rates, when 83 million foreign tourists arrived in Spain. In fact, the greater dependence on tourism of some communities is the factor that makes the great difference in the impact of the coronavirus between them.

Thus, the body establishes three groups. On the one hand, those most affected by the crisis because most of their economy depends on tourism: the Balearic Islands and the Canary Islands, which will bear GDP falls much higher than the national average (-12%). In the case of the Balearic Islands, its GDP will sink by 22%, while the Canary Islands will see its economy reduced by 17.9%, according to Funcas calculations.

The Balearic and Canary Islands will be the most affected; Murcia, Extremadura and Castilla-La Mancha, the least
regional GDP collapse

Secondly, the communities more in line with the national decline, where although tourism has an important weight, its economy is “somewhat more diversified” and national travelers are more important than foreigners, said Raymond Torres, director of Coyuntura de Funcas during the presentation. In this are Madrid, Catalonia, Valencian Community or Andalusia.

And finally, the communities that come out better off the crisis correspond to the less economically dynamic ones, who live more from the primary sector and where there is a greater presence of the public sector. These are Murcia, Castilla-La Mancha, Extremadura, Aragon, Navarra and Cantabria.

Minimum wage increase

One of the consequences of the economic collapse is layoffs. And although Torres assured that the plans to help the self-employed due to cessation of activity and ERTEs have mitigated “much more than in other crises” The increase in unemployment, the affiliation to Social Security has fallen throughout Spain, especially in communities where dependence on tourism is greater.

Faced with the controversy over the increase in the minimum wage in 2021, the general director of Funcas, Carlos Ocaña, warned that the “priority” now is “to protect the greatest number of companies and jobs”. Facing these coming months that are going to be “complicated”, he asked that economic policy think about “how to save the largest number of companies” and “not about adjustments.”

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