Deloitte forecasts an abrupt fall in all sectors (except food) during the isolation and restriction period, which would end sometime in May (see graph). From then on, the stabilization phase takes place, in which the Horeca sector (hotels, restaurants and cafeterias), offices, education and shops reopen to the public. Between June and December, little by little, it would return to normal, with a possible recovery from the end of 2020.
In terms of sectors, the restaurant and leisure sector would experience a peak in May (due to home orders) and would gradually improve throughout the year. The next sector with a better recovery would be retail, which just when the restrictions end would experience a steady but slight rise until Christmas. However, at that time there would be a small reduction, associated with the decline in purchasing power, which would anticipate a “more austere Christmas”, says the consultant.
On the other side of the balance, the travel and hotel sector would be the worst off. Starting in June, basic travel would be allowed and it would not be until August that Deloitte estimates that domestic tourism would begin to recover. All of this would mean that until November, corporate events and activities postponed by the pandemic would not resume. In addition, international tourism would not arrive regularly to our country until December, causing a slight growth of the travel and hotel sector, but that would still be lower than in 2019.
In the more positive scenario of “rapid containment”, Deloitte predicts that if normality returns in May and restrictions are lifted, food will stabilize in the third quarter. On the other hand, at the opposite pole, the consultant explains that if the return to normal is delayed until October, the recovery would be postponed until 2021. In any case, the analysis indicates that at least until July, the two food aspects will not be equalized: “In the face of summer, consumption is again balanced between home and Horeca,” estimates the consultant. However, since it is a basic sector during the health crisis, food is the only one of the sectors analysed that will not contract throughout 2020.
Retail, in the best of cases, will experience a “rebound in June by purchase or repressed events (fashion, beauty, luxury, home) and a rapid stabilization in summer. For an intermediate situation, the consultant predicts that credit lines and “tough measures to contain corporate spending” will manage to curb some of the liquidity tensions. However, in this moderate scenario, Deloitte believes that the recovery will be “slow” and demand “will continue to be affected until 2021.
Rafael Doménech, head of economic analysis at BBVA Research, explains that “each week of the year contributes around 2% of Spanish GDP”. Doménech adds that “it is not unreasonable to think that every week, with the current confinement, we are having a loss of activity in the range of 30% or 40%”. Sectors associated with consumption, such as the restaurant industry, will only have a “partial recovery” in 2020, since they will be limited by the measures of social distancing, he says.
According to Gonzalo García, director of economics at AFI-Analistas Financieros, as well as catering, one part of the real estate sector – that of the office business – will be badly hit. On the contrary, he points out that in a second phase, of recovery, sectors like renewables and companies associated with digitalization will be favored, as will agri-food, which “these weeks have seen that it is essential and will be powerful during the recovery”. Likewise, shopping centres will be able to recover normality before other businesses thanks to the fact that they have more space to comply with the distance, García points out.
For Sergi Jiménez, professor of economics at Pompeu Fabra University and associate researcher at Fedea, “the only thing that is certain is that the longer the full activation of the economy is delayed, the worse it will be, starting with tourism, but it will be transmitted like an oil slick to the entire economy”.
Savings will soar to 40% by 2021 from pre-covid levels, so that consumer spending will remain depressed next year, according to estimates by Deloitte. Only the food will resist the conservative attitude of the Spanish, which in this item will increase spending by 2%. The rest of the areas will either remain the same or fall.
While during the pre-crisis period 9% was spent on travel, next year families will spend two percentage points less (a decrease of 12%). The money invested in restoration also drops by one percentage point, contracting by 5% from pre-crisis levels. Also, consumption of retail trade (retail) could fall up to 10% next year compared to the stage before the Covid-19, the consultant estimates.
Author: El Pais