The Economic Impact of the SARS-COV-2 (COVID-19) Pandemic in Spain

Abstract

Background: The COVID-19 pandemic has hit both the Spanish economy and the population's health hard. The result is an unprecedented economic and social crisis due to uncertainty about the remedy and the socioeconomic effects on people's lives.

Methods: We performed a retrospective analysis of the macroeconomic impact of the COVID-19 pandemic in 2020 using key indicators of the Spanish economy for the 17 Autonomous Communities (ACs) of the country. National statistics were examined in the search for impacts or anomalies occurring since the beginning of the pandemic. To estimate the strength of the impact on each of the indicators analyzed, we used Bayesian structural time series. We also calculated the correlation between the rate of GDP decline during 2020 and the cumulative incidence of COVID-19 cases per 100,000 inhabitants in the ACs.

Results: In 2020, the cumulative impact on the gross domestic product was of -11.41% (95% credible interval: -13.46; -9.29). The indicator for business turnover changed by -9.37% (-12.71; -6.07). The Spanish employment market was strongly affected; our estimates showed a cumulative increase of 11.9% (4.27; 19.45) in the rate of unemployment during 2020. The worst indicators were recorded in the ACs most economically dependent on the services sector. There was no statistical association between the incidence of COVID-19 in 2020 and the fall in GDP in the ACs.

Conclusions: Our estimates portray a dramatic situation in Spain, where the COVID-19 crisis has had more serious economic and health consequences than in other European countries. The productive system in Spain is too dependent on sectors vulnerable to the pandemic, and it is necessary to design and implement profound changes through the European Next Generation program.

Keywords: Bayesian structural time series; COVID-19; Spain; economic impact; uncertainty.

Figure 1

Impact of the COVID-19 pandemic on health and economic growth in European countries. Source: Own preparation, based on OECD statistics and John Hopkins University CSSE COVID-19 data.

Figure 2

Impact of the COVID-19 crisis on the gross domestic product volume index in Spain.

Figure 3

Impact of the COVID-19 crisis on supply and demand in Spain. (a) Industrial production index (b) Business turnover index (c) Consumer confidence index. Frequency: Monthly.

Figure 4

Impact of the COVID-19 crisis on the employment market in Spain. (a) Total unemployment rate (b) Services sector unemployment rate. Frequency: Quarterly.

Figure 5

Gross domestic product decrease and COVID-19 incidence by Autonomous Communities. Spain 2020. Source: Own preparation based on Spanish Ministry of Health statistics and our estimates in Table 1.