The paralysis of numerous economic activities during the second quarter of the year as a result of the declaration of the state of alarm by the COVID-19 has caused a setback in the economy in Spain as it had not been for a long time.
The Spanish economy went into technical recession in the second quarter of the year after registering a 18.5% drop in GDP between April and June, its biggest quarterly fall in the historical series handled by the National Institute of Statistics (INE), which began in 1970. Until now, the biggest quarterly declines in GDP had been in the first quarter of this year (-5.2%) and in the first quarter of 2009 (-2.6%).
With the sharp contraction of GDP in the second quarter, which virtually coincides with the state of alarm over the health crisis, Spain enters again in technical recession by adding two consecutive quarters in negative.
This is the third time in the 21st century that the Spanish economy is facing a recession: during the 2008 crisis it entered it twice, the first time in the fourth quarter of 2018 (leaving it in the second quarter of 2009) and the second in the second quarter of 2011. This second recession lasted longer, until the fourth quarter of 2013.
Quarterly data show a collapse in household consumption of 21.2%, unprecedented in the historical series. In contrast public spending increased between April and June by 0.4%, much less than in the first quarter (+1.8%), whilst consumer spending by non-profit institutions and those serving households rose by 0.5%, three tenths of a point less than in the previous quarter.
Investment, on the other hand, recorded in the second quarter a historic cut of 22.3%, with falls of around 25% or more in the case of both housing and machinery and equipment investment.
Employment in the economy, in terms of hours worked, fell in the second quarter by 21.4% over the previous quarter. This rate was lower than that of full-time equivalent jobs (-17.7%, 15.8 points lower than in the first quarter), due to the reduction observed in the average full-time working day (-4.5%).
In interannual terms, the hours worked decreased 24.8%, a rate 20.6 points lower than that of the first quarter. In turn, full-time equivalent jobs decreased 18.5%, that is, 17.9 points less than in the first quarter, indicating that almost 3.4 million full-time equivalent jobs were destroyed in one year.