The situation of the tourism sector improved considerably during the summer months, outperforming the projections of many of the companies in the industry.
The situation of the tourism sector improved considerably during the summer months, outperforming the projections of many of the companies in the industry. The vaccination of a large part of the population, the implementation of the EU Digital COVID Certificate, the great pent-up demand for tourism services and the easing of restrictions in the hospitality industry have been the compendium of factors that have supported a significant and necessary recovery for the sector. However, among the factors mentioned above, the one we believe has been most crucial is vaccination, as this has minimised the number of severe cases of COVID-19, helping to relieve the pressure on the healthcare system. This not only opened the door to a recovery during the summer season but has also laid the foundations for travel to get back to normal in the medium term, as predicted.
Domestic tourism, which before the pandemic had accounted for around 30% of tourist expenditure in Spain, achieved a larger share this summer than in the same period of 2019 as many Spanish tourists who used to go abroad for their holidays chose destinations closer to home. On the other hand, international demand was still more sluggish than usual, albeit posting considerable improvement: overnight stays by foreigners went from a 90% drop in May compared with the same month in 2019 to a 48% reduction in August. According to CaixaBank’s internal data, the source countries that have provided the most support for this improvement are those that have adopted the Digital COVID Certificate, mainly the countries in the Schengen Area. Other important countries, such as the UK and American markets, were still far from their pre-COVID levels although they showed a promising trend over the summer, leading us to believe they will be responsible for most of the sector’s improvement in 2022, once tourist arrivals from the EU consolidate.
Given this situation, we expect 2021 to close with tourism-related GDP at 54% of its 2019 level, up by 55% annually. Looking ahead to 2022, our viewpoint remains optimistic. We expect the good domestic and EU tourism figures to consolidate while the British and American source markets should gradually improve, bringing tourism-related GDP up to 85% of its 2019 level, an annual growth of 57%. These figures would mean that the 2022 financial year would be profitable for the vast majority of the industry, after a very tough year and a half. We can therefore reaffirm that the tourism industry’s long-term sustainability is beyond doubt and it will once again play a leading role in driving the growth of Spain’s economy.
La irrupción de la pandemia a principios de 2020 ha tenido repercusiones sin precedentes en muchos ámbitos de la economía. Uno de ellos ha sido el consumo de los hogares, principal componente del PIB y tradicionalmente considerado un indicador de la salud de la economía y del bienestar de la sociedad. A causa de las restricciones a la actividad y a la movilidad durante la crisis sanitaria provocada por la COVID-19, el desplome del consumo fue mucho mayor al acontecido durante crisis anteriores. La parte positiva es que, con el levantamiento de las restricciones, el consumo en España ha rebotado en 2021 de forma más acusada que en el pasado. De hecho, en octubre el monitor de consumo elaborado por CaixaBank Research con datos internos ya se situaba un 13% por encima del mismo mes de 2019.
Esta tendencia debería continuar, aunque de forma más moderada, durante 2022 y 2023 (prevemos crecimientos del consumo de 5,7% y 3,6% en 2022 y 2023, respectivamente). Estas previsiones se sustentan sobre la hipótesis que gracias a la campaña de vacunación no se tendrán que aplicar restricciones a la actividad y a la movilidad tan severas como las que tuvimos hasta la pasada primavera. Y si bien han aparecido factores que quitarán brillo a la recuperación, como el aumento de los precios de la energía y los cuellos de botella en las cadenas globales de distribución, a medida que vayan remitiendo durante 2022 creemos que la demanda embalsada durante la pandemia, la recuperación del mercado laboral, la mejora de la confianza del consumidor, el mantenimiento de unas condiciones financieras acomodaticias y el impulso que supondrán los fondos Next Generation EU seguirán sustentando la recuperación del consumo.
En este informe ponemos el foco en uno de los factores de fondo más importantes: la demanda embalsada. El impedimento para consumir muchos servicios durante las restricciones en 2020 y la consecuente generación de ahorro forzoso (estimamos que unos 46.600 millones de euros, el 3,7% del PIB de 2019) está espoleando el consumo tras la reapertura de la actividad, apoyado por el hecho de que los consumidores perciben que la crisis ha sido temporal (gracias a la campaña de vacunación) y no tienen necesidad de mantener tanto ahorro por motivos precautorios. Con la ayuda de los datos internos y completamente anonimizados de CaixaBank de más de 10 millones de clientes, analizamos exhaustivamente tanto la demanda embalsada ya materializada como el recorrido que le queda, según el perfil de cada consumidor.
Nuestros resultados apuntan a que el ahorro forzoso durante la pandemia ha sido sustancial, pero a su vez muy heterogéneo: la distribución del exceso de ahorro entre las rentas bajas, medias y altas ha sido del 4%, 58% y 38%, respectivamente. También encontramos que este ahorro embalsado se concentra sobre todo en las personas de más de 60 años. Según nuestro análisis, el ahorro acumulado ya se está deshaciendo en 2021 (en concreto, las rentas bajas deshacen el 100% de su ahorro embalsado, mientras que las rentas medias y altas deshacen un 67% y 36%, respectivamente), beneficiando especialmente a los sectores del turismo, el ocio y la restauración.
También aprovechamos este estudio para analizar cuestiones más estructurales sobre los patrones de consumo mediante los datos internos. Debido a los cambios en los patrones de consumo, la inflación a la que hizo frente el consumidor medio en 2020 fue del 0,1% según nuestros datos internos (en contraste con el dato oficial del –0,3%) y aún mayor para las personas de más de 60 años y de rentas bajas. Finalmente, encontramos que los consumidores generalmente gastan más durante la primera semana del mes y que este patrón es especialmente acusado entre las rentas bajas y los jóvenes. En cambio, las personas mayores de 60 años y las rentas altas acostumbran a gastar de forma más uniforme.
El consumo en España se está recuperando a mayor velocidad que en crisis anteriores. Ello se pone de manifiesto en el monitor de consumo elaborado por CaixaBank Research con datos internos. En el mes de octubre, nuestro indicador de consumo ya se situaba un 13% por encima del mismo mes de 2019.
El consumo en España se está recuperando a mayor velocidad que en crisis anteriores. Ello se pone de manifiesto en el monitor de consumo elaborado por CaixaBank Research con datos internos. En el mes de octubre, nuestro indicador de consumo ya se situaba un 13% por encima del mismo mes de 2019. El levantamiento de la mayoría de las restricciones en el 2T 2021 preparó el terreno para la recuperación del consumo,3 especialmente en aquellos sectores más afectados por las restricciones (ocio, restauración y turismo), tal y como recoge nuestro monitor de consumo. Asimismo, en 2021 esta recuperación se ha visto apoyada por la activación de la demanda embalsada que se acumuló durante los meses más duros de la pandemia y por la notable mejora tanto del mercado laboral como de la confianza del consumidor, elementos que seguirán impulsando el consumo en 2022 y 2023.
El desplome del consumo durante la crisis sanitaria provocada por la COVID-19 fue mucho mayor al acontecido durante la crisis financiera y de deuda soberana de 2008-2014. Ello se debe en gran parte a que los factores que deprimieron el consumo en uno y otro periodos recesivos son muy distintos. Durante las crisis de 2008-2014, los mayores determinantes fueron la caída de la renta bruta disponible y, en menor medida, el aumento de la incertidumbre asociada al devenir de la situación económica.1 En cambio, durante la crisis de 2020, las principales protagonistas han sido las restricciones a la actividad y a la movilidad (véase el gráfico de la página siguiente).2
Respecto a la demanda embalsada, durante los próximos trimestres esta jugará un papel especialmente importante en las rentas altas, que son las que generaron más exceso de ahorro durante 20204 y, según nuestras estimaciones, son las que todavía tienen un colchón más amplio para mantener un ritmo de crecimiento del consumo relativamente elevado para sus estándares. Concretamente, estimamos que en 2021 han materializado en forma de consumo menos de la mitad del exceso de ahorro que acumularon,5 por lo que tienen margen para que su consumo siga creciendo de forma notable en 2022.6
En cuanto al mercado laboral, esperamos que su recuperación se afiance y se acabe cerrando el 2022 y el 2023 con un crecimiento del empleo del 2,7% y del 2,1%, respectivamente. Ello será el elemento clave sobre el que se seguirá sustentando el crecimiento de la renta de los hogares, que esperamos que registre un aumento del 8,5% acumulado en el periodo 2022-2023.
Otro elemento que también contribuirá al crecimiento del consumo es la mejora en la confianza del consumidor, que se ha recuperado de forma muy notable, sobre todo, gracias a la exitosa campaña de vacunación. Aunque no descartamos que se puedan producir nuevas olas de contagios, confiamos en que la presión hospitalaria se mantendrá acotada los próximos meses gracias a la efectividad de las vacunas y al elevado porcentaje de población vacunada que se ha alcanzado en España. Ello debería permitir que en los próximos meses no se tengan que aplicar restricciones a la movilidad y a la actividad tan severas como las que tuvimos hasta la pasada primavera. Esta es una de las principales hipótesis sobre la que se sustenta nuestro escenario macroeconómico. En este sentido, uno de los principales riesgos que lo rodean es la eventual aparición de nuevas variantes del virus que reduzcan la efectividad de las vacunas.
Además de los tres factores mencionados anteriormente, también creemos que el consumo se verá respaldado por el mantenimiento de unas condiciones financieras acomodaticias, ya que no esperamos que el BCE empiece a aumentar los tipos de interés hasta 2024.7 Todo ello favorecerá la nueva producción de crédito al consumo para financiar, sobre todo, la adquisición de bienes duraderos. Finalmente, el plan de recuperación europeo NGEU también impulsará el consumo en los próximos trimestres. El plan de recuperación y transformación europeo tiene como uno de sus principales objetivos fomentar la movilidad sostenible y la rehabilitación de viviendas para promover el ahorro energético, lo que también espoleará el consumo de bienes duraderos como, por ejemplo, coches eléctricos y aparatos de climatización más eficientes energéticamente.
Aunque esperamos que la recuperación del consumo siga siendo sólida en los próximos años, en los últimos meses han aparecido algunos frenos que le quitarán algo de brillo. Por un lado, en la segunda parte del año los precios de la energía, tanto de la electricidad como de los combustibles, han subido de manera acusada. El aumento de estos precios reduce el poder de compra de los hogares, lo que acaba limitando la capacidad de recuperación del consumo. Pese a que esperamos que los precios de la energía vayan normalizándose a lo largo de 2022, prevemos que el impacto sobre el crecimiento del consumo en dicho año se situará alrededor de los 0,7 p. p.8
Por otro lado, el fuerte aumento de la demanda a nivel internacional durante los últimos meses ha generado cuellos de botella en las cadenas globales de distribución, lo que está limitando la capacidad de recuperación de la oferta. De este modo, en los próximos meses el crecimiento del consumo también se verá limitado por el alargamiento de los plazos de entrega que se están produciendo en algunos productos de gran consumo, como los vehículos, y por el alza de precios debido a los desajustes entra la oferta y la demanda en algunos sectores. De todas formas, de acuerdo con los últimos indicadores disponibles, esperamos que estas restricciones empiecen a desvanecerse a partir del 2T 2022, por lo que el impacto final sobre la recuperación del consumo esperamos que sea limitado.9
En definitiva, los frenos que han aparecido recientemente quitarán algo de vigorosidad a la recuperación del consumo, pero los factores de fondo que lo apoyan son sólidos, por lo que esperamos que este registre tasas de crecimiento relativamente elevadas tanto en 2022 como en 2023, del 5,7% y 3,6%, respectivamente.
Aunque a un ritmo más moderado, esperamos que el crecimiento del consumo siga siendo dinámico los próximos años gracias al apoyo de varios factores, como la movilización de la demanda embalsada durante la pandemia, la recuperación del mercado laboral, la mejora de la confianza del consumidor, el mantenimiento de unas condiciones financieras acomodaticias y el impulso que supondrán los fondos Next Generation EU. Así, pese a que han aparecido algunos factores que quitarán algo de brillo a la recuperación, como la crisis energética y las tensiones en las cadenas de distribución globales, esperamos que el ritmo de crecimiento del consumo acabará siendo dinámico los próximos dos años, con un avance del 5,7% en 2022 y del 3,6% en 2023.
Las restricciones implementadas para frenar el avance del coronavirus y la precaución por la incertidumbre reinante provocaron un gran aumento del ahorro de los hogares españoles en 2020. En concreto, estimamos que el ahorro acumulado por la pandemia alcanzó los 46.600 millones de euros, el 3,7% del PIB de 2019. Este fuerte aumento del ahorro se ha ido deshaciendo a medida que hemos podido recuperar nuestros hábitos, lo que está espoleando una rápida recuperación del consumo. Una tendencia que muy probablemente se mantendrá en los próximos trimestres.
Las restricciones implementadas para frenar el avance del coronavirus y la precaución por la incertidumbre reinante provocaron un gran aumento del ahorro de los hogares españoles en 2020. En concreto, estimamos que el ahorro acumulado por la pandemia10 alcanzó los 46.600 millones de euros, el 3,7% del PIB de 2019. Este fuerte aumento del ahorro se ha ido deshaciendo a medida que hemos podido recuperar nuestros hábitos, lo que está espoleando una rápida recuperación del consumo. Una tendencia que muy probablemente se mantendrá en los próximos trimestres.11
¿Cómo se distribuyó el aumento del ahorro entre los distintos grupos de población? A partir de la información de más de 10 millones de clientes de CaixaBank debidamente anonimizados reconstruimos la evolución, en tiempo real, de la renta bruta disponible (RBD) de los hogares y del consumo por distintos tramos de renta y por edades.12
Como era de esperar, el aumento del ahorro fue especialmente pronunciado entre las personas con mayores ingresos: las rentas altas y medias-altas coparon prácticamente dos tercios de la bolsa de ahorro adicional generada en 2020 a causa de la pandemia, tal y como recoge el gráfico de la siguiente página.
Los resultados son intuitivos: las restricciones fueron generales para toda la población y supusieron una reducción involuntaria del consumo, especialmente en lo que se refiere a los servicios y los bienes duraderos, lo que hizo que las personas con rentas más elevadas ahorraran una fracción mayor de su renta.
Cuando analizamos cómo se distribuyó el exceso de ahorro por edades, vemos que los séniores (las personas de más de 60 años) acapararon algo más de la mitad de la bolsa de ahorro que se generó a nivel agregado; los adultos (30-59 años), un tercio, y los jóvenes (16-29 años), una parte pequeña (véase el gráfico de la página siguiente). De nuevo, el resultado parece plausible: las personas mayores estuvieron sujetas a las mismas restricciones que el resto de grupos demográficos, pero el impacto en su poder adquisitivo fue menor.
La demanda embalsada durante los meses más duros de la pandemia está favoreciendo un fuerte ritmo de crecimiento del consumo en todos los grupos de población, desde los que tienen menor nivel de renta hasta las personas con unos ingresos superiores. De hecho, ha permitido que el consumo ya superara en 2021 los registros previos a la pandemia, tanto a nivel agregado como entre todos los niveles de renta.13 Este gran tirón de la demanda, que es general entre los principales países desarrollados, ayuda a entender las dificultades logísticas a nivel global para satisfacer la rápida recuperación de la demanda.
De todas formas, entre los distintos colectivos se observan algunas diferencias notables. En las personas con menor renta, el rebote del consumo es más vigoroso con respecto al periodo previo a la pandemia. En cambio, entre las personas de mayor renta, la tasa de crecimiento del consumo es menor.14 De todas formas, cabe remarcar que, dado que las personas con mayor renta son las que tienen un mayor volumen de consumo, aunque la tasa de crecimiento sea inferior, su contribución al crecimiento agregado del consumo es muy importante. Concretamente, para 2021 estimamos que el 20% de los hogares con menores ingresos ha realizado alrededor del 10% del consumo agregado en España, mientras que el 20% de la población con mayores ingresos ha efectuado más del 30% del total.
En cuanto al perfil demográfico, destaca el fuerte crecimiento del consumo que se observa entre los jóvenes. Para los séniores nuestras proyecciones muestran un avance vigoroso del gasto en 2021 respecto a 2019, impulsado en buena parte por el aumento agregado del ahorro en este grupo. En cambio, en el caso de los adultos, el consumo está repuntando de forma más moderada si lo comparamos con los otros grupos. El hecho de que la incertidumbre económica asociada a la COVID-19 no se haya disipado por completo, y de que hayan aparecido otras fuentes de riesgo como la escasez de suministros o el aumento de los precios energéticos, podría explicar el menor despegue del consumo en este grupo demográfico, que en general acumula un mayor nivel de deuda y quizás está moderando su consumo por motivos de precaución.
En definitiva, la recuperación del consumo en 2021 ha sido una realidad palpable que ha llegado a un conjunto amplio y heterogéneo de familias, en particular entre los jóvenes y los colectivos con menores ingresos. De cara a 2022, el gran volumen de ahorro acumulado a nivel agregado durante la pandemia invita a pensar que la recuperación del consumo tiene todavía mucho margen por recorrer, especialmente entre los grupos de mayor renta, siempre que los problemas logísticos en las cadenas de valor globales se vayan solucionando y los niveles de inflación vayan normalizándose.
Históricamente, y por lo general, los aumentos (o caídas) del consumo van de la mano de mayores aumentos (o caídas) de los préstamos al consumo. Esta relación es especialmente estrecha en el caso de los bienes duraderos, que son los que más se financian dado que suelen ser gastos de mayor envergadura.
Históricamente, y por lo general, los aumentos (o caídas) del consumo van de la mano de mayores aumentos (o caídas) de los préstamos al consumo. Esta relación es especialmente estrecha en el caso de los bienes duraderos, que son los que más se financian dado que suelen ser gastos de mayor envergadura.
A diferencia de crisis pasadas, en esta ocasión el rebote del consumo será más elevado: esperamos que el crecimiento del consumo nominal se sitúe en 2022 en cotas superiores a la recuperación gradual de la crisis anterior, dando continuidad al impulso observado en 2021. Esta mayor velocidad de recuperación se explica porque buena parte del ahorro generado en 2020 fue forzada y se espera que se deshaga de forma relativamente rápida, y porque las medidas de apoyo económico han mitigado el impacto de la crisis en los hogares. Este auge de la recuperación del consumo impulsará también un mayor crecimiento de los préstamos al consumo, aunque la magnitud del rebote dependerá de cómo se haya distribuido el exceso de ahorro.
Durante 2020 la deuda de los hogares con finalidad de consumo se contrajo un 2,6% anual por el colapso del consumo (que cayó un 12% en 2020) a raíz de las restricciones a la movilidad. Estas circunstancias excepcionales también impactaron en la nueva producción de crédito al consumo, que se redujo un 26,6% anual. La contracción de la deuda fue parcialmente suavizada por las moratorias legislativas y sectoriales para los hogares más vulnerables.
Durante 2021, y tras la eliminación de las restricciones de movilidad, el consumo se fue recuperando y con él la producción de crédito, que repuntó de forma vigorosa.15 Esto moderó la contracción de la deuda de los hogares con esta finalidad.16 Cuando estudiamos con datos internos de CaixaBank la evolución de la deuda durante 2021 por niveles de renta,17 observamos que aumentó para el grupo de menor renta, cayó de forma significativa para las rentas medias y descendió de forma más leve para las rentas elevadas.
Respecto a las rentas medias,18 el resultado es coherente con un proceso de desapalancamiento, al ser el grupo que más volumen de deuda acumulaba antes de la pandemia (el 58% de la deuda con finalidad de consumo se concentraba en este colectivo). Además, ahorraron de forma significativa durante 2020, concentrando casi el 60% del exceso de ahorro agregado de 2020, según estimaciones a partir de datos internos. Nuestros resultados apuntan a que estas rentas medias han aprovechado el exceso de ahorro no solo para consumir a pulmón,19 sino también para desapalancarse. En otras palabras, ha habido algo de pushback para este colectivo. En cambio, las personas con menores ingresos tuvieron un exceso de ahorro modesto en 2020 y además son las que han consumido de forma más vigorosa en 2021 respecto al periodo previo a la pandemia. Es lógico por tanto que estén financiando este consumo elevado, lo que explicaría que su deuda haya aumentado desde que acabó la fase más cruda de la pandemia. Finalmente, las personas de rentas altas, que acumularon el 38% del exceso de ahorro de 2020, tienen una baja carga de la deuda al consumo en relación con su renta, lo que explicaría que no hayan dedicado este ahorro a reducir su deuda en el mismo grado que las rentas medias.
Para entender las necesidades de financiación del consumo en el futuro debemos entender primero qué parte del consumo embalsado se materializó en 2021 y cuánto podrá ser satisfecho mediante el ahorro acumulado durante la pandemia.
A partir de datos internos, estimamos el consumo adicional que tuvo lugar en 2021 con respecto al consumo que hubiéramos visto antes de la pandemia por tramos de renta.20 Al compararlo con el exceso de ahorro generado en 2020 por tramos de renta, los resultados sugieren que en agregado la mitad del exceso de ahorro se habría deshecho en 2021. En particular, nuestros resultados (véase el siguiente gráfico) muestran que las rentas bajas y medias-bajas habrían consumido todo el exceso de ahorro de la pandemia en 2021, mientras que las rentas medias habrían consumido el 60% y las medias-altas y altas, un porcentaje claramente por debajo de la mitad. Los resultados van en línea con la recuperación de la nueva producción de crédito que hemos observado en 2021. Los colectivos con rentas bajas o medias-bajas no disponen de suficiente ahorro acumulado en 2020 para satisfacer la demanda embalsada, por lo que recurren a la financiación bancaria, además de utilizar el ahorro acumulado antes de la pandemia. En cambio, el resto de los niveles de renta todavía cuenta con un colchón de ahorro para financiar el consumo de 2022 o para aumentar el ahorro a largo plazo para futuras inversiones o para la jubilación.
De cara a 2022 se espera que el crecimiento del consumo sea vigoroso y por encima del promedio histórico. Este crecimiento se apoyará en unas condiciones financieras favorables, lo que quede por materializarse de la demanda embalsada y los fondos del plan de recuperación europeo NGEU. Estas transferencias europeas buscan fomentar la movilidad sostenible y la rehabilitación de viviendas para promover el ahorro energético, entre otros ámbitos, lo que impulsará el consumo de bienes duraderos como coches eléctricos, puntos de recarga, electrodomésticos, aparatos de climatización y calefacción más eficientes energéticamente, etc. Además, las ayudas al sector privado no cubren la totalidad de la inversión, por lo que se requerirá de cofinanciación.
Gran parte del consumo de 2022 para las rentas bajas y medias-bajas, sobre todo de bienes duraderos, se apoyará en la financiación bancaria, dado que ya no dispondrán del colchón de ahorro de 2020. Además, para las rentas medias y medias-altas, estimamos que el consumo adicional que se espera en 2022 respecto al consumo promedio en prepandemia será mayor que lo que les quede del ahorro embalsado de la pandemia (siempre que no persistan los actuales problemas de oferta), por lo que también requerirán de otras fuentes de financiación como la bancaria.21 Por todo ello, se espera que la nueva producción de crédito al consumo crezca de forma notable en 2022.
A partir del análisis del crecimiento del consumo desde mayo de 2021, cuando finalizó el último estado de alarma, observamos que el gasto en transporte, y sobre todo en ocio y restauración y en turismo, se recuperó con especial vigor. Así pues, los sectores más perjudicados por las restricciones (la mayoría todavía vigentes en el 1T 2021) son los que más se están recuperando. En cambio, los bienes duraderos (muebles, textil, etc.) se han beneficiado de forma mucho más modesta del repunte del consumo, como se verá más adelante, mientras que el gasto en bienes de primera necesidad ha registrado un retroceso (excepto entre los hogares con menores rentas), debido en parte a que estos bienes son sustituibles por los servicios ofrecidos por la restauración.
A partir del análisis del crecimiento del consumo desde mayo de 2021,22 cuando finalizó el último estado de alarma, observamos que el gasto en transporte, y sobre todo en ocio y restauración y en turismo, se recuperó con especial vigor. Así pues, los sectores más perjudicados por las restricciones (la mayoría todavía vigentes en el 1T 2021) son los que más se están recuperando.23 En cambio, los bienes duraderos (muebles, textil, etc.) se han beneficiado de forma mucho más modesta del repunte del consumo, como se verá más adelante, mientras que el gasto en bienes de primera necesidad ha registrado un retroceso (excepto entre los hogares con menores rentas), debido en parte a que estos bienes son sustituibles por los servicios ofrecidos por la restauración.
Otro aspecto que llama la atención es que, en la mayoría de los sectores, el rebote del consumo ha sido más intenso entre las personas de menor renta, algo que se puede explicar con el hecho de que son los colectivos que ya han liberado toda su demanda embalsada en 2021. En cuanto a la edad del consumidor, los patrones de consumo son muy similares. No obstante, la sustitución de bienes de primera necesidad por el ocio y la restauración ha sido mayor entre los séniores. Este colectivo es el que ha registrado mayores tasas de crecimiento en el sector de los bienes de primera necesidad desde la irrupción de la pandemia, por lo que resulta plausible que una vez se hayan sentido más seguros, gracias a los avances en la campaña de vacunación, hayan sustituido parte de este gasto por gasto en restauración.
La recuperación del gasto en bienes duraderos ha sido más contenida24 en los distintos subsectores que podemos capturar con los datos internos de CaixaBank. Esto se debe, principalmente, a que la contracción que sufrió durante las fases más críticas de la pandemia fue más suave que en otros sectores, gracias a su gran capacidad de adaptación a los canales de venta online, cuyo crecimiento está siendo notable y prolongado en el tiempo, amortiguando la caída de las ventas presenciales. En consecuencia su recuperación, aunque existente, no ha sido tan intensa como en otros sectores.
Un segundo factor tiene que ver con las cadenas de suministro y la capacidad de producción. El hecho de que la mayor parte de la caída del consumo durante la pandemia se explique por la imposición de restricciones provocó que la demanda se haya recuperado mucho más rápido en comparación con crisis precedentes (de hecho, los niveles de consumo en todas las categorías de bienes ya superaron en 2021 los niveles de 2019). No obstante, en muchos sectores la oferta no ha podido recuperarse tan rápidamente.
Este desajuste entre oferta y demanda ha tensionado sobremanera las cadenas de suministro, especialmente en el transporte marítimo. En el sector de los bienes duraderos, donde el producto final es muchas veces fruto de una larga cadena de producción, esta situación resulta especialmente relevante. El precio por enviar un contenedor con mercancía en barco se ha disparado durante los últimos meses, alcanzando cotas no vistas en los últimos años, algo que ha provocado que muchas empresas se hayan quedado sin aprovisionamientos para poder mantener su nivel de producción.
Finalmente, otro aspecto a tener en cuenta y que también está relacionado con el desajuste entre la oferta y la demanda nos lleva a China, la fábrica del mundo. Las nuevas directrices marcadas por Pekín en términos de contención del consumo de energía para mantener los precios a raya y cumplir con los objetivos medioambientales han provocado que un número importante de empresas se hayan visto obligadas a reducir o incluso parar durante algunos días su producción. Junto con el tensionamiento de las cadenas de suministro mencionado anteriormente, ambas problemáticas pueden suponer un riesgo a la baja en el mercado de bienes duraderos.
Una de las variables que más impacto tiene en las decisiones de consumo son los precios, que cayeron en España un 0,3% en el conjunto de 2020 según datos oficiales.25 No obstante, los cambios en los patrones de consumo fueron muy pronunciados el pasado año, y ello hizo muy difícil medir con precisión la cifra a la que realmente se enfrentaron los consumidores. Estimaciones propias basadas en datos internos de alta frecuencia sugieren que esta fue algo superior, del 0,1%.26 Además, la inflación no afectó a todos por igual e hizo distinciones según la edad y los ingresos.
En lenguaje llano, para calcular la inflación solo se necesitan dos ingredientes: una cesta de la compra que contenga los bienes y servicios que consume un hogar representativo y la evolución de los precios de dichos bienes y servicios.27 Bien conocidos son los problemas que conlleva aislar de la evolución de los precios los cambios en la calidad de los bienes. Y también lo es la dificultad de poner un precio a los bienes y servicios que, durante algunos periodos de 2020, no se pudieron comercializar a causa de las restricciones por la pandemia. Así pues, centraremos nuestra atención en una complicación adicional: los cambios en la composición de la cesta de la compra representativa. Esta cesta consta de una multitud de bienes y servicios englobados en 12 grandes grupos,28 cada uno con un peso que refleja la preponderancia que tiene en la cesta de la compra del consumidor medio.
Antes de la pandemia, la revisión anual de estos pesos pasaba bastante desapercibida debido a la estabilidad en los patrones de consumo. Sin embargo, la llegada de la COVID-19 y la consiguiente imposición de restricciones alteraron por completo nuestros hábitos de consumo. Los organismos oficiales encargados de calcular la inflación se encontraron con las manos atadas a una distribución de pesos basada en una cesta que era representativa en el 2019, pero que dejó de serlo a partir de marzo de 2020. La pregunta que nos surge entonces es: ¿si los organismos oficiales hubieran podido modificar los pesos de la cesta representativa para adaptarla a la nueva situación, cuál habría sido realmente la inflación de la economía española en 2020?
Para responder a esta pregunta acudimos a los datos internos y completamente anonimizados de pagos con tarjeta en terminales de punto de venta (TPV) de CaixaBank.29 Antes, para asegurarnos de que la cesta de la compra resultante de los datos internos es representativa, comparamos los pesos según nuestros datos de 2019 con los datos oficiales en los grupos de bienes y servicios que podemos capturar con la operativa de tarjetas en TPV (es decir, aquellos cuya contraprestación, o cuyo pago, no se realiza en gran parte mediante transferencias o domiciliaciones).30 El resultado de esta comparativa muestra de manera clara que el consumo observado en nuestros datos internos se ajusta bastante bien a los patrones de consumo del consumidor medio, tal y como recoge el siguiente gráfico.
Un año más tarde, en 2020, las piezas del puzle se desencajan y aparece una disparidad entre los pesos oficiales (calculados a principios de 2020 a partir de los patrones de consumo de 2019) y la distribución de pesos que muestran los datos internos. Por un lado, en estos últimos se observa que los bienes y servicios más afectados por las restricciones (transporte, hoteles, cafés y restaurantes, y ocio y cultura) son los que más cayeron en peso, quedando compensados por el grupo de alimentación y bebidas no alcohólicas. Esta redistribución de pesos se debe a que pasamos mucho más tiempo en casa que en épocas prepandemia, lo que también explica el ligero aumento del gasto en menaje. Por otro lado, queda patente el papel del e-commerce como amortiguador de la caída de ventas presenciales en el grupo de vestido y calzado, como se refleja en el gráfico bajo estas líneas.31
En la medida en que la cesta que utilizaron los organismos oficiales para calcular la inflación en 2020 daba un peso excesivo a los grupos en los que los precios crecieron menos, o incluso cayeron con fuerza,32 y un peso insuficiente al grupo de alimentación y bebidas no alcohólicas (con un aumento de su precio del 2,4% en 2020), todo apunta a que la serie de inflación oficial padeció un sesgo a la baja. Así, desde abril en adelante y según los datos internos, la inflación fue mayor (y la deflación menor en aquellos meses donde ambas series muestran una caída de precios) que la publicada por el INE, como muestra el primer gráfico de la página siguiente. En cambio, esta brecha entre ambas series es inexistente durante 2019, y mucho menor en 2021, una vez que los organismos oficiales actualizaron a principios de año los pesos de la cesta de la compra, adaptándola a los patrones de consumo observados durante el primer año de pandemia (segundo gráfico de la página siguiente).33
Hasta ahora hemos analizado la inflación en relación con el consumidor medio, pero es evidente que la cesta de bienes y servicios varía según el colectivo demográfico que la consume. Tras dividir el conjunto de clientes por edades y por nivel de ingresos, llegamos a la conclusión de que la tasa de inflación fue más elevada para los mayores de 60 años e inferior para los jóvenes entre 16 y 29 años durante 2020 (véase el gráfico inferior).34 Esta diferencia entre generaciones se explica por unos patrones de consumo distintos: los séniores dedican una mayor proporción de su gasto a bienes de primera necesidad (inflacionistas durante 2020) y menor a los grupos de transporte u ocio y cultura (deflacionistas), lo contrario que ocurre con los jóvenes.35
Asimismo, en el gráfico de la siguiente página se aprecia cómo la cesta de la compra se encareció más para los consumidores con un salario en la parte baja de la distribución (percentil 10), en comparación con los salarios en la parte alta (percentil 90), algo que se explica por el hecho de que las rentas bajas concentran una mayor parte de su consumo en bienes de primera necesidad y menos en aquellos bienes y servicios relacionados con el transporte, turismo y ocio.36
Para concluir, tras comprobar que las estimaciones de la inflación en España durante 2020 habrían sido más altas si los datos sobre los patrones de consumo hubieran incorporado los cambios en tiempo real, es importante poner en valor el poder de los datos de alta frecuencia en un entorno cambiante como en el que vivimos. Es cierto que eventos tan extremos como la crisis sanitaria actual, que transformaron la estructura de gasto de la noche a la mañana, no ocurren frecuentemente. Sin embargo, nuestro mundo es cada día más dinámico, por lo que disponer de este tipo de información cobrará cada vez mayor importancia, especialmente en una variable como la tasa de inflación.
La distribución del gasto a lo largo del mes por parte de los consumidores, una cuestión primordial para entender su conducta, todavía no se ha estudiado con la profundidad que se merece a causa de la escasez de datos públicos de alta frecuencia. ¿Cómo distribuyen los consumidores su gasto semana a semana? ¿Cuánto más se gastan a principios de mes, que es cuando la mayoría cobra la nómina? ¿Consumimos con la misma intensidad independientemente de nuestra edad o de nuestros ingresos? Gracias a la explotación de datos internos de CaixaBank con frecuencia diaria, podemos analizar detenidamente los patrones temporales de consumo y dar respuesta a estas preguntas.
Partiendo de los datos internos completamente anonimizados de pagos y retiradas de efectivo entre 2017 y 2019 con tarjetas emitidas por CaixaBank,37 confirmamos que el porcentaje de gasto es mayor durante la primera semana del mes38 y va decreciendo a lo largo de la segunda y tercera semana, para luego repuntar levemente en la cuarta (véase el gráfico de la siguiente página).39 El hecho de que una parte significativa de la muestra analizada reciba sus ingresos durante los últimos días del mes40 es una de las razones por las que el porcentaje de gasto repunta en la cuarta semana.
Existen tres posibles explicaciones (no excluyentes entre sí) de por qué los consumidores gastan más justo después de recibir sus ingresos. La primera se asocia a un perfil de consumidor que consume más en cuanto puede. ¿No conocemos todos a alguien, si es que no somos nosotros mismos, que a primeros de mes se permite el lujo de salir a cenar fuera o escaparse de fin de semana, y que se aprieta el cinturón a finales de mes?
La teoría económica nos dice que este comportamiento puede responder a dos razones: la impaciencia y la inconsistencia temporal. La primera simplemente expresa que hay personas que valoran más las gratificaciones presentes que las futuras, lo cual las lleva a consumir más en cuanto disponen de nuevos ingresos, en vez de repartir su consumo de manera uniforme a lo largo del mes. El segundo motivo es un concepto algo menos intuitivo, aunque también muy estudiado,41 que argumenta que existe otro tipo de individuos que, pese a valorar su bienestar futuro (no son impacientes), por falta de fuerza de voluntad acaban centrándose en el presente al tomar sus decisiones de consumo, sin tener en cuenta el día de mañana. En otras palabras, estos consumidores exhiben un comportamiento miópico, que queda acentuado en la semana en que reciben sus ingresos.
La segunda explicación es que los consumidores se decanten por concentrar su gasto en la primera semana del mes por motivos organizativos. Por ejemplo, con tal de ahorrar tiempo, pueden decidir ir al supermercado y hacer la compra del mes durante la primera semana, en vez de hacer compras semanales. Otro ejemplo sería el del abono de transporte mensual, que puede comprarse a principios de mes pero se utiliza a lo largo de las semanas. En este sentido, estos consumidores no son ni impacientes ni miópicos aunque concentren su gasto en la primera semana del mes ya que distribuyen su consumo uniformemente.
La tercera explicación del patrón de gasto a primeros de mes gira en torno a los reintegros. Según un estudio del BCE42 que analiza en profundidad el uso del efectivo por parte de los hogares en la eurozona, a la pregunta de cuáles eran las dos mayores ventajas de manejar dinero en efectivo, un 42% de los encuestados respondió que les permitía hacer un mejor seguimiento del gasto. Esta respuesta fue la más popular y apunta a que el efectivo podría actuar como mecanismo de compromiso. Dicho de otro modo, los consumidores podrían retirar del cajero durante la primera semana una parte importante del efectivo que estiman que van a necesitar a lo largo del mes, pero lo consumirían de manera uniforme.43
Para averiguar cuál de las explicaciones anteriores tiene más peso, descomponemos la distribución del gasto por semana (recogida en el gráfico anterior) entre reintegros y gasto con tarjeta (gráfico bajo estas líneas). Teniendo en cuenta que los reintegros muestran la mayor concentración en la primera semana, podemos concluir que el uso del efectivo como mecanismo de compromiso es un factor a tener en cuenta. En cambio, si nos fijamos en el gasto con tarjeta, podemos apreciar que su distribución es mucho más uniforme, con un porcentaje cercano al 25% en las cuatro semanas del mes.
Aprovechando la granularidad de nuestros datos internos, podemos ir un paso más allá y analizar si las conclusiones para los datos agregados son las mismas para los distintos grupos salariales y generaciones, en el primer caso dividiendo el conjunto de clientes de CaixaBank en salarios mensuales bajos (hasta 1.000 euros) y altos (más de 2.000 euros), y en el segundo caso dividiéndolos en jóvenes (de 16 a 29 años), adultos jóvenes (de 30 a 49 años) y adultos séniores (de 50 a 64 años).
En la parte izquierda del siguiente gráfico se muestra la distribución del gasto total por salarios. Independientemente del nivel salarial, vemos que el porcentaje de gasto sigue siendo mayor durante la primera semana del mes, y va decreciendo en la segunda y tercera semana (en promedio para todos los meses analizados). Dicho esto, se aprecia cierta heterogeneidad entre las rentas bajas y las altas, ya que la distribución del gasto es más desigual para las primeras. No obstante, el grueso de la diferencia observada en el gasto total se explica por el comportamiento de las retiradas de efectivo, tal como se aprecia en la parte central del mismo gráfico. En otras palabras, si nos fijamos en el gasto con tarjeta (parte derecha del gráfico), vemos que se distribuye de manera más similar que el gasto total a lo largo del mes en los dos tramos salariales.
Estos resultados nos indican la relevancia del uso del efectivo como mecanismo de compromiso, especialmente en las rentas bajas, lo cual no debería sorprendernos si se tiene en cuenta que son las que disponen de unos recursos más limitados y deben tener una visión más clara de los gastos que realizan.
En cuanto al análisis por generaciones, las conclusiones sobre la distribución del gasto por semanas también se mantienen independientemente de la edad: el gasto es mayor la primera semana del mes y menor en las semanas posteriores. Sin embargo, también se aprecia que los jóvenes son los que gastan de manera más desigual a lo largo del mes, y los adultos sénior los que menos.44 Asimismo, como sucedía con los resultados agregados y por tramos salariales, la distribución del gasto es más uniforme cuando solo se tiene en cuenta el gasto con tarjeta, como se indica en el gráfico inferior.
Como conclusión, gracias al uso de datos internos de alta frecuencia, hemos constatado que los consumidores no distribuyen su gasto de manera uniforme a lo largo del mes, sino que en general gastan más en la primera semana. Además, dicho comportamiento es más acusado para las rentas bajas y los jóvenes.
The COVID-19 pandemic is severely impacting economic activity and the real estate sector is also feeling the effects, albeit not as much as other sectors. Specifically, at CaixaBank Research we expect GDP to fall by between 13% and 15% in 2020 and not to return to pre-crisis levels until the end of 2023. However, despite the seriousness of the situation and the high uncertainty regarding how the pandemic will develop, it is important to note that the sector is supported by a much stronger foundation than in the previous crisis of 2008.
Before the outbreak of the coronavirus, the financial situation of Spanish households and companies in the sector was generally healthier than it was 12 years ago. Moreover, the number of new properties being built was not excessive in relation to the demographic trend. Banks also have much better solvency and liquidity ratios. All these factors make us more confident in the sector's ability to weather the current crisis.
Nevertheless, the scope of the economic impact of COVID-19 will significantly affect the labour market and, consequently, the demand for housing. House sales fell by 39.2% year-on-year in April and we expect a drop of between 30% and 40% for 2020 (with a gradual recovery in 2021). Household income is being eroded and uncertainty about future employment prospects may lead to an increase in precautionary saving by households and the postponement of long-term investment decisions. House sales to foreigners, who accounted for 12.5% of the total in 2019, will be particularly affected.
Construction activity was directly hit during the state of emergency but resumed relatively quickly as restrictions were lifted. All the same, a significant slowdown in the initiation of new building projects is highly likely due to the uncertain climate. New building permits could decline by 20% to 40% by 2020.
Given the drop in demand, house prices will undergo a significant adjustment and, by the end of 2021, could be 6% to 9% below their pre-crisis levels in Spain as a whole. Nevertheless, there will be considerable differences, both geographical and in the type of housing, with all the evidence pointing to tourist areas and second-hand properties suffering the biggest decline.
The rental market is likely to be less affected as it is supported by higher demand given the difficulties faced by households to buy a home. In fact, we have devoted the article «To buy or to rent? A question of income but particularly of savings capacity» in this Sector Report to an analysis of housing affordability for renters.
Finally, we should also note that the current crisis is triggering changes in many different aspects of our lives, a large number of them related to our residential preferences (never have we spent so much time in our homes!). The pandemic could also accelerate some changes in areas such as the modernisation of homes, which would support the transition to a more sustainable economy.
Once the peak of the epidemic is over, we must focus all our efforts on recovery. The resulting economic and social changes may be far-reaching and will entail a transformation of the real estate market. Given this situation, we must be able to turn the challenges into opportunities. Only then will we #ComeOutStronger.
The COVID-19 crisis is severely affecting house purchases. Once the slump in transactions during the lockdown has been overcome, the evolution in demand will largely depend on the recovery of the labour market and international tourism over the coming months. Our forecast scenario predicts a gradual recovery in demand, although the more than half a million transactions recorded in 2019 will not be repeated, even in 2021.
During the weeks the state of emergency was in place, the buying and selling of property was in hibernation. Restrictions on non-essential movements and the temporary closure of physical real estate agencies and notary offices except for urgent, pressing cases paralysed new real estate transactions. According to figures from the National Statistics Institute, in April sales slumped by 39.2% year-on-year while credit to purchase housing was down by 51.0% year-on-year. Similarly, national accounting data show that residential investment fell by 9.0% quarter-on-quarter in Q1 2020, a drop of around 50% in the second half of March if we assume that residential investment had remained stable until 14 March.
Despite these very large figures, thanks to digital technologies the sector has remained operational throughout the state of emergency. According to the information published on several real estate portals, online property searches increased significantly during the weeks of lockdown (especially related to homes with more outdoor space, pointing to changes in demand preferences) and real estate agencies have continued to offer their services online (with virtual visits to apartments, etc.). With regard to new builds, market data indicate that the rate of deliveries has followed the planned schedule except for some occasional delays (at present, houses are being delivered whose purchase decision was made approximately 18 months ago), although the sale deadlines for new developments are being extended.
Once this first stage of hibernation has been overcome and the economy adapts to the «new normal», one question comes to the fore: how will housing demand evolve in the medium term? To answer this question, we will examine the main factors that determine demand for housing: the gross disposable income of households, the formation of new households, financial conditions, foreign demand and the demand for second homes.
The COVID-19 crisis is having an unprecedented impact on the labour market. Social Security registration data showed a decrease of almost 950,000 workers between 12 March and 30 April (the period with the greatest restrictions on activity), most of these workers being on temporary contracts (approximately 70% of the total). This figure does not include employees affected by Spain's furlough measures or ERTE (around 3.4 million in April)1 as they are still registered as employees with Social Security even though they are not working, nor the self-employed whose work has been interrupted (1.3 million in April). In other words, if we take into account the workers leaving the Social Security registration system, those affected by furlough measures and self-employed workers who have requested the extraordinary allowance for business interruption, we calculate that more than 30% of workers were unable to work on 30 April.
However, as economic activity returns to normal, furloughed workers are gradually starting to return to their jobs and employment is being created again (in May, Social Security registration increased by 188,000 and the number of furloughed employees fell to just under 3 million). We expect this improvement to continue in the second half of the year, although 2020 could still end with an increase in unemployment of between 1.7 million and 1.9 million compared to Q4 2019.2 The unemployment rate would rise in Q3 2020 to an interval of 21.5% to 22.7%, falling again in 2021 (between 18.1% and 19.8% by the end of 2021).
The bleak outlook for the labour market has had a severe impact on household income. The various social and economic support measures adopted by the government aim to offset part of these losses by, for example, relaxing the conditions to receive unemployment benefit, providing assistance for the self-employed and specific allowances for temporary workers who are not entitled to unemployment benefit, as well as approving a minimum living wage and other measures, such as guaranteeing basic supplies and the moratorium on mortgages and consumer loans for vulnerable families.3 The banking sector has also taken the initiative to complement several of these measures, for instance by extending the mortgage moratorium from 3 to 12 months.4 Moreover, the property development sector has implemented supportive measures such as moratoriums on the payment of deposits normally put down before a property is delivered.
Increased uncertainty about the economic and employment outlook is likely to affect housing demand over the coming quarters. Generally speaking, in economic crises consumers tend to increase their precautionary savings and postpone their consumption of durables and long-term investments, such as buying a home. This is being borne out by the available data: investment in residential housing construction fell by 9.0% in Q1 2020, the largest decline since the series started in 1995. Furthermore, European Commission data for Q2 2020 show that the percentage of households intending to buy a home in the next 12 months is very close to its historical minimum.
will slow down the formation of households and consequently the demand for a main residence.
Household formation will most likely slow down during the crisis. On the one hand, the deteriorating employment situation of young people, who are more affected by job losses since many of them are often on temporary contracts, may lead them to postpone the decision to form their own household. On the other hand, it is very likely that the restrictions on international movements established by many countries as a result of COVID-19 will curb the number of immigrants entering Spain in 2020. It should be noted that, since 2015, Spain has once again become a net recipient of immigrants after years of crisis in which there were many more immigrants departing than arriving.5 Indeed, of the 322,600 new households that have been formed in the past five years,6 a large share include foreign nationals (76% of the total), either exclusively or in mixed households. In fact, in the past two years (2018 and 2019), households made up solely of Spanish nationals have decreased, highlighting the importance of immigration in maintaining Spain's population dynamics.
The composition of households in terms of nationality is relevant to the housing market, as the propensity to rent is much higher among foreigners: 65.6% rented their main residence compared with 12.5% of households comprised exclusively of Spaniards. Despite lower immigration inflows, demand for rental housing is expected to continue to rise as increased uncertainty about job prospects may affect the decision to buy, as already mentioned.
The COVID-19 crisis initially led to global financial conditions becoming notably tougher due to marked volatility in financial markets and risk aversion on the part of investors. The major central banks were quick to respond, however, acting rapidly and decisively. The ECB adopted a package of extraordinary measures in March, extended in April and June, aimed at ensuring abundant liquidity, easing credit conditions for households and businesses and anchoring a low interest rate environment.7
The low interest rate environment provides an important breathing space for families since it helps to ensure the financial burden borne by households due to debt interest payments remains very low (0.6% of gross disposable income in 2019).8 Benchmark interest rates are expected to remain around their current level for several years.
However, demand for second homes by Spaniards might be less affected in relative terms.
In recent years, purchases by foreigners have been fundamental in boosting Spain's real estate sector, especially in large cities and tourist areas. In 2019, foreigners bought almost 63,000 homes in Spain, accounting for 12.5% of total purchases according to the College of Registrars. The geographical distribution is very uneven: while foreigners are barely present in some provinces, in other, more tourist-related provinces their share is highly significant, as in the case of Alicante with more than 40%.
As expected, COVID-19 has had a severe impact on foreign purchases. The global nature of the pandemic has meant that many countries have imposed restrictions on people's movements. In particular, the countries that tend to buy most Spanish properties (UK and France) have taken steps similar to Spain. We can therefore observe that Q1 sales to foreigners totalled 14,850, down by 6.4% year-on-year. The decline in property purchases by UK citizens (–14%) is particularly large, accentuating a downward trend that was already noticeable. On the other hand, French and German buyers, the second and third largest nationalities, held up fairly well in the first quarter, although the closing of borders and paralysis of the real estate market in the second quarter will slow down the trend for this variable.
Given the gradual recovery expected for international flows of people, the decline in foreign demand for housing (in many cases for holiday purposes or investment in tourist rental accommodation) will probably be more persistent and take considerably longer to recover. Nevertheless, in May and June Google Trends data show an increase in the popularity of searches for «property Spain» in the United Kingdom, «acheter maison Espagne» in France and «Haus Spanien» in Germany, suggesting international buyers are still interested. In addition, the low interest rate environment and volatile financial markets increase the attractiveness of the real estate sector compared with other investment alternatives. In this respect, domestic and international investors continue to show an interest in the Spanish market.
Second homes have a significant weight in the Spanish real estate market: they represent 14.6% of the stock of housing and in 2019 accounted for 13.6% of all sales (about 75,000).9 During the state of emergency, second homes unfortunately made the headlines because of unauthorised travel to these properties and the risk this posed by spreading the virus to less affected regions and populations. But it also highlighted the fact that owning a second home is a widespread practice in Spain.
A household's age and economic situation are the main factors that influence the decision to acquire a second home.10 Despite the fact that the crisis is affecting all households to a greater or lesser extent, the population aged over 40 with a medium-high income level, who are the potential buyers of second homes, are suffering less from its consequences. It is therefore to be expected that second home sales will decline less than sales overall, a pattern already observed in the previous recession: the share of second home sales increased from 13.4% in 2006 to 17.3% on average between 2008 and 2013.
The following are the prospects and main aspects regarding the real estate sector in 2020-2021 according to CaixaBank Research, with the proviso that forecasts are subject to a much higher degree of uncertainty than usual:
It is inevitable that the property development and construction sectors, which are very sensitive to economic conditions and confidence levels, will contract significantly this year. We expect a notable decline in new building permits and a severe impact on employment in the construction industry. However, the nature of the shock and the state of the sector before the appearance of COVID-19, much more favourable than a decade ago, suggest it should be able to recover.
Construction activity was directly affected throughout the state of emergency, especially during the two weeks when all non-essential work was restricted. The slump in cement consumption in April, –50% year-on-year, bears witness to this. However, as restrictions on economic activity have been lifted, construction work that was already underway has resumed relatively quickly and, despite some supply chain disruptions, no significant delays are expected in the delivery of new housing in 2020. The latest data available on completion certificates, for March, show that 81,700 homes were finished in the past 12 months (+17.6% year-on-year). Given that more than 100,000 homes were granted permits in 2019, we predict that between 80,000 and 100,000 could be completed this year.
On the other hand, it is very likely that the start of new building projects will slow down this year due to the uncertain climate and greater risk aversion, which would affect the number of homes completed in 2021. New building permits fell by 37% year–on–year in March compared to an increase of 5.5% in 2019. The impact COVID-19 may have on new construction will largely depend on expectations regarding the persistence of the economic shock. Real estate development is a long-term business and requires an environment of relative price stability to ensure the development returns a profit within two years. In this respect, the decrease in the construction sector's economic sentiment index to –32.4 points in May (compared to an average of –7 points in 2019) points to further declines in activity over the coming months.
We therefore expect the number of new building permits to fall significantly in 2020. Uncertainty is very high and this is reflected in a relatively wide range of forecasts: we predict a decline of between 40% and 20%; i.e. 65,000 to 85,000 new building permits. 2021 should see a gradual recovery in new building permits thanks to less economic uncertainty and developments in the pandemic (between 75,000 and 95,000 homes).
The labour market has been hard hit by the pandemic. Between 11 March and 31 May, the number of workers registered with Social Security as employed in the construction sector fell by 5.9% (–75,000).1 In addition, 93,400 construction workers were affected by furlough measures and 168,647 self-employed persons had applied for the extraordinary allowance due to business interruption as of 31 May. Therefore, 26.4% of the sector's registered workers at 11 March were not working by the end of May. This high percentage, however, is lower than the average for the economy as a whole (29.1%), since there are sectors such as hospitality (79.7%) and retail (36%) that have been much harder hit by the crisis (see the following chart). Real estate activities, on the other hand, have suffered relatively less in terms of Social Security registered workers (-6,700 workers between 11 March and 31 May, –4.5%) although a large number of workers have been furloughed (16.7%) and 43% of self-employed workers in the sector have requested the extraordinary allowance for business interruption.
Over the coming months, the expected number of jobs to be created by firms in the construction industry is not encouraging. In May, the European Commission's indicator for the sector's recruitment prospects stood at –30 points, 10 points better than the minimum reached in April (–40 points) but well below the average of –7 points recorded in the 12 pre-crisis months.
The big job losses seen in construction are due to the sector's typical employment system and company structure. Specifically, the larger number of jobs lost in an economic shock can be partly explained by a high degree of temporary employment (40% of workers in the construction sector were on a temporary contract in 2019), by a high proportion of self-employed workers (30% of the total) and by small companies (55% of construction companies in Spain have no employees and an additional 40% have fewer than 10). This situation highlights the sector's structural problems, which become more visible at times of crisis. In this respect, the strategy followed to exit the recession should promote company growth and human capital management, for instance via measures to retain skilled labour and invest in personnel training and education.
The starting point for economic agents is much more solid than in 2008.
However, it is also very important to stress that the sector's starting point is much more solid than when the previous crisis erupted in 2008, suggesting it might recover more readily:
Given the dramatic decline in demand, house prices are likely to undergo some adjustment in the period 2020-2021, although there will be significant differences depending on the property's location and type. Specifically, we expect house prices to fall more sharply in the second-hand market and tourist areas, which have been severely affected by the restrictions on international travel.
According to data published by the Ministry of Transport, Mobility and Urban Agenda (based on valuations), house prices fell by 0.8% quarter-on-quarter in Q1 2020. In year-on-year terms, progress was still positive with a slight increase of 0.3%, albeit a marked slowdown compared with the 2.1% year-on-year growth recorded in Q4 2019. The house price data published by the National Statistics Institute (based on transaction prices) also posted a slowdown to 3.2% year-on-year in Q1 2020 compared with an increase of 3.6% in Q4 2020. This deceleration was caused by lower growth in the price of second-hand housing (0.4% quarter-on-quarter), while new builds recorded a significant rise (5.1% quarter-on-quarter).
House price indicators from different real estate portals (based on the sale prices on offer), which are published more frequently and with less time lag, are gradually starting to reflect the impact of the crisis. For example, the Fotocasa index, which reflects the trend in the price per square metre of second-hand housing, fell by 1.1% year-on-year in May, while the Tinsa index showed a tiny increase on the Mediterranean coast (0.3%). However, significant growth is still being recorded in large cities (3.6%) and the Balearic and Canary Islands (3.8%), although in both cases a slowdown can be observed compared with the growth posted in 2019. Lower prices are also starting to be seen in apartments offered for sale on real estate portals, although the impact on transaction prices is still small, for the time being.
In the second half of the year, the negative trend in house prices is expected to increase. Typically, after a significant drop in sales, prices tend to adjust a few months later. On this occasion the decline in sales has been very sharp due to the lockdown measures restricting people's mobility. It is therefore to be expected that house prices will gradually react to the new environment.
There is considerable uncertainty regarding the extent of the adjustment in house prices during this recession. We believe it very unlikely that prices will adjust as much as they did during the previous recessionary period and the price adjustment period is also likely to be significantly shorter. As already mentioned in the previous article, the real estate sector is not the cause of the current shock nor has it accumulated imbalances that would require price adjustment mechanisms to be implemented to regulate and control the system. In particular, real estate was not overpriced in general before COVID-19.1 All this has led us to produce scenarios in which the adjustment in house prices will be more contained than in the last crisis. Specifically, we predict that house prices could fall by between 6% and 9% during the 2020-2021 period in Spain as a whole. While house prices would start to show positive growth rates in the second half of 2021, we do not expect them to return to the pre-crisis level before 2024.
this correction being larger in tourist areas and for second-hand housing.
Those markets that already had more price tension, such as the centre of big cities and tourist areas, will see a bigger adjustment. The size of the adjustment will partly depend on how investor interest in these areas evolves because, in recent years, such investments have contributed to the increased dynamism of these markets.2 Changes in residential preferences in terms of where and how to live, encouraged by, for instance, the greater prevalence of working from home in the «new normal», may reduce pressure on residential prices in the most congested cities and shift some of the demand to conurbations with the best connections to workplaces.
On the other hand, the house price trend in tourist areas will be highly dependent on the recovery in international travel. Although restrictions were partially lifted at the end of June, the recovery in tourist flows is expected to be incomplete as long as there is no vaccine or effective treatment against the disease.
The decline in house prices is likely to be greater in the second-hand market, which accounts for the bulk of transactions (over 80% in 2019), since this is usually more sensitive to the economic cycle. The decline in the price of new housing will be smaller as supply is more limited in this segment. This dichotomy in the evolution of the price of new and used housing was also observed in the previous recession: from its peak in 2008 to its lowest point in 2013, the price of new housing fell by 32% in cumulative terms while second-hand housing saw a much bigger cumulative drop of 43.7%. Moreover, this pattern was observed in all the autonomous regions.
The current crisis is triggering changes in many aspects of our lives, a large number of them related to our residential preferences. For example, working from home can transform how and where we live. The pandemic has also boosted the digitisation of the real estate sector and could speed up certain changes in other areas such as house modernisation, supporting the transition to a more sustainable economy.
Beyond a short-term analysis of how the economy and real estate sector will evolve this year and next, it is important to ask whether, once this pandemic is over, we will return to a situation similar to before the shock or whether there will be substantial changes in our society and in the way we live and relate to each other. These changes can permanently affect our consumer habits and preferences and cover a wide spectrum, from how we are educated or work to how we shop and play sports, for example. Although it is difficult to provide any definitive answers to this question, some transformations were already underway before the pandemic which may have been speeded up by the crisis and precipitate a permanent change.1
The crisis has boosted working from home. During the pandemic, those with the opportunity to do so have preferred to work from home to enable social distancing and avoid unnecessary travel. However, even before the pandemic an increasing number of companies were encouraging their employees to work from home by creating the necessary infrastructure for remote connections, providing workers with mobile devices and offering them the necessary training in digital tools. A recent study by CaixaBank Research estimates that, at present, 32.6% of all employees in Spain could potentially carry out their work remotely, a percentage similar to that of most advanced economies.2 In this respect, it is very likely that working from home was one of the changes that were already taking place and will accelerate as a result of the crisis.
The increase in remote working has important implications for the real estate market as it directly affects buyer preferences regarding the location of the property (people can live further away from their workplace if they have to commute fewer days a week) and the size and layout of the home (with demand for larger, more versatile homes, with different uses of the space, for instance).3 This transformation has an impact that goes beyond the real estate sector itself, seeing as urban, transport and public service planning will also have to adapt to the new situation.
Changes in the way we work will affect our way of life and can help to speed up the economic transition to a more sustainable, environmentally friendly system. Buyers are increasingly paying attention to issues related to the sustainability of homes and their energy efficiency, a change that was already taking place but may accelerate in the wake of the pandemic. The crisis has also exposed the shortcomings in some housing that does not meet the minimum health requirements. In this respect, the modernisation of existing housing may become more important, as such properties tended to be built based on very different sustainability standards to those now required for new builds.
Firms that had already invested in adopting new digital technologies have been able to continue offering their services remotely, for example through virtual tours of properties. Potential buyers have also been offered better conditions, for instance by being able to book an apartment for longer than usual during the state
of emergency and with no cancellation charge. In many cases, the client's experience may have improved. Once the pandemic is over, this could lead to further client demands for greater flexibility and more personalised services.
Another aspect the coronavirus crisis has exposed is the huge difficulty of building houses while complying with social distancing measures on site. This is partly due to the very nature of the activity. But it also highlights the fact that the construction sector is lagging behind in adopting new digital technologies and robotisation. For example, the number of workers could be reduced on sites with more industrialised production processes, where many of the specialised jobs are more automated and performed at another location.
The crisis has also brought about changes in the rental market. In recent years the number of flats used for short-term tourist rental has grown exponentially. With the collapse of tourism, these properties have become vacant and many private investors have decided to transfer them to conventional rentals. This process is likely to alter as international tourism recovers but it may not be completely reversed if investors perceive greater risk in the short-term market (e.g. more volatile returns).
On a more negative note, the crisis has also exposed problems of housing affordability, especially among the most vulnerable people who tend to live in rented accommodation.14 The government has adopted several measures to support renters in the face of the COVID-19 crisis, such as suspending evictions until the end of the year, the automatic renewal of six-month rental contracts and the provision of micro-credit to cover rent payments. Such measures will help to address the current social emergency. However, the rental market suffers from structural problems which require stable regulations that encourage investment. One of the priorities in this respect should be the creation of a significant amount of accommodation at affordable rents.
In short, COVID-19 has not only brought us a profound economic crisis. Once we get over this calamity, and we will, the resulting economic and social changes may be far-reaching with a huge impact on the real estate market in the long term. There's no turning back.
The spread of the coronavirus throughout the world has come as an unprecedented shock to the global economy. The Spanish economy has been particularly hard hit, partly because of its greater dependence on international tourism. In the second half of the year, we expect the economic recovery to take hold thanks to the easing of social distancing measures and the boost provided by the wide range of fiscal and monetary measures adopted. However, we believe the economy will continue to operate below potential over the next few years.
At the beginning of the year, the forecasts pointed to Spain's real estate sector continuing to expand in 2020, albeit at a more moderate rate than in previous years. However, these scenarios were soon overtaken by the global spread of the coronavirus. Although it is still very difficult to calculate the precise economic consequences of this crisis (uncertainty remains very high), they will most probably be of an unprecedented nature, both for the world and for the Spanish economy and, specifically, for the real estate sector.
Global activity will fall sharply in 2020 (by around 4%), a far greater decline than the slump experienced during the Great Recession of 2009, due to the economic effects of the social distancing measures implemented by most countries to counteract the spread of the virus. To cope with this severe economic shock, a battery of fiscal and monetary measures of extraordinary scope and depth have been rapidly deployed, with the aim of protecting the balance sheets of both households and businesses. The major central banks are also acting quickly and decisively, ensuring abundant liquidity and easier access to credit, as well as anchoring a low interest rate environment. These measures will help to boost economic recovery as from the second half of 2020, a process that should culminate in strong growth in 2021 which could exceed 6% globally.
The economic measures being implemented will support the recovery in activity
The Spanish economy is one of the developed economies with the largest decline in activity in the first half of 2020 due to the severe impact of the pandemic and the country's greater dependence on tourism, a sector that has been seriously affected by the crisis as a result of restrictions on the international movement of people. Consequently, after plummeting by 5.2% quarter–on–quarter (-4.1% year-on-year) in the first quarter of the year (the biggest quarter–on–quarter drop since the National Statistics Institute's historical series began in 1995), all available indicators suggest that, in Q2, economic activity suffered a much bigger decline as more weeks were affected by the restrictions associated with the state of emergency. However, from May onwards the initial phases of the lifting of the lockdown helped to gradually reactivate economic activity, as shown by indicators such as electricity consumption and card spending.
Nevertheless, the uncertainty surrounding the forecast scenario is exceptionally high, especially because it is not clear how the pandemic will evolve in the future. We have therefore chosen to present a central range of forecasts. One of the key assumptions is that social distancing measures will have to be maintained well into 2021, until an effective vaccine or treatment for COVID-19 is discovered. During this time, it is likely that further outbreaks of infection will occur but it is assumed these will be localised and temporary, and that another full lockdown will not be necessary. All this will hinder the economy's ability to recover which, although we expect to see a significant rebound in 2021, will be unlikely to return to pre-crisis activity levels before 2023.1
COVID-19 is having a huge impact on economic activity in Spain and, in particular, on the tourism industry. At CaixaBank Research we expect GDP to fall by between 13% and 15% in 2020, not returning to its pre-crisis levels until 2023. The outlook in 2020 is even grimmer for Spain's tourism industry as it is one of the sectors hardest hit by the pandemic.
After Spain declared a state of emergency on 14 March, the population's mobility was reduced to a minimum; borders were closed and people had to be confined to their homes to check the spread of the coronavirus. As a result, a sector as dependent on mobility as the tourism industry entered a period of almost total inactivity. Only since the lockdown measures have begun to be lifted has the outlook for the sector started to improve. The indicators of card expenditure via CaixaBank's payment terminals suggest that tourist spending has started to wake up from its hibernation and is embarking on an incipient recovery. Consequently, if the health situation is kept under control, a considerable improvement in activity is expected for the second half of 2020, although this will not prevent demand for the year as a whole falling very sharply. According to CaixaBank Research forecasts, by 2020 tourist expenditure by foreigners will fall by around 50% while domestic tourists will spend almost 30% less.
The tourism business is faced with a very complex situation. There was a total clousure of tourist accommodation during the toughest months of the lockdown, so the spring season was completely lost. This has pushed the sector to resort massively to lines of credit backed by the ICO and also furlough measures (ERTE in Spanish) to ensure that companies can survive without revenue over a period that has lasted more than two months. Given this situation, the tourism industry saw higher job losses than any other sector during the first half of the year. Up to June about 44% of the reduction in workers affiliated to Social Security was due to job losses in tourism companies. Nevertheless, activity indicators point to a gradual recovery in tourism business. According to the card payments made via CaixaBank terminals, whereas 75% of hotels and tourist agencies were still closed in May, during the second week of July this figure fell to 31%. If this improvement in demand prospects persists over the coming months, the sector's recovery will continue and some of the jobs lost should be recovered.
Accordingly, we estimate that tourism-related GDP could decline by nearly 45% in 2020 as a whole, representing a loss of around 5% of total GDP. This impact will be felt particularly by the autonomous regions in the Mediterranean and on the islands, which are heavily dependent on the influx of international tourists and whose tourism sectors account for a larger share of the regions' business.
Although the outlook for 2020 is overwhelmingly negative, the medium term could bring cause for more optimism. Up to February 2020, the tourism industry had enjoyed almost a decade of extraordinary results, during which time it took on the investments required to boost its competitiveness. Post-coronavirus tourism will have to adapt its supply to the new situation and be able to meet demands for higher quality and more personalised services, improvements which the sector's entrepreneurs have already been focusing on for several years. For all these reasons, and although COVID-19 has made the future more uncertain than ever, the tourism industry is capable of recovering strongly in the medium term, which would make it a key driver of growth for the Spanish economy.
The health crisis caused by COVID-19 has represented an unprecedented shock for Spain's tourism sector. Demand indicators confirm that the stoppage during the months of lockdown was total, both for international and domestic tourism. The end of the state of emergency and the recovery in international mobility within the EU have helped to revive flows of tourists to Spain. The outlook for the coming months points to a relatively rapid upturn in domestic tourism with a more gradual recovery for international tourist flows, although the delicate situation of the pandemic will still be a major source of uncertainty.
Mobility has played a vital role in the success of Spanish tourism in recent decades. The great expansion in international air connections and the connectivity boom brought about by the creation of the Schengen area helped Spain to go from receiving 32 million international tourists in 1995 to over 83 million in 2019, becoming the world's second country in terms of international visitors, only outdone by France. So far, in 2020 the global spread of COVID-19 has put the international and domestic mobility of the world's population on hold. The lockdown measures implemented by a large number of countries to control the pandemic resulted in 183 countries with closed borders or entry restrictions by the end of June. This has caused international tourist flows to plummet and Spain has been no exception.
Spain declared a state of emergency on 14 March which led to the closure of its borders. Between that date and the 15 June, the first day on which a group of German tourists were allowed onto the island of Mallorca, no foreign tourist could travel to Spain. According to INE figures, 10.5 million international arrivals were recorded between January and May 2020, 63.9% fewer than over the same period in 2019. The extent of the decline is similar if we look at spending by foreign tourists up to May (–61.7%) as well as the overnight stays in tourist accommodations (–61.5%). All this provides unequivocal proof that, in April and May, the slump in international tourism business, which accounts for 70% of tourism demand, has been extraordinarily severe.
The state of emergency also resulted in a lockdown for the local population so that, until May, the reduction in domestic tourist flows was similar to that for international tourists. Overnight stays in tourist accommodation by Spanish travellers fell by 62.8% year-on-year between January and May. However, the recovery in domestic mobility has been one of the main aspects of Spain coming out of the lockdown, with hotel business picking up slightly at the end of May.
According to data from the hotel occupancy survey, 82,600 Spanish travellers stayed at a hotel in May, with an average stay of 2.5 nights. This is a very small volume (98% less than in May 2019) but it illustrates that lifting the lockdown has already started to have a positive effect on domestic tourist flows.
Given the current situation, which changes from week to week, the description provided by official data, most of which are available up to May 2020, gives a somewhat outdated picture of sector's current status. Therefore, in recent months economic analysts have particularly focused on exploiting higher frequency indicators that enable us to monitor the situation in real time. A large number of technology companies and public institutions have made an effort to make daily mobility statistics available to the public as these provide an insight into the extent of the impact and, most importantly, how quickly business is getting back to normal.1
One particularly useful indicator is produced by Google based on its Google Maps mobile app. As can be seen in the chart, the drop in mobility outside the home during the most intense phase of the state of emergency peaked at 80%2 whereas a clear change in trend can be seen as of 2 May, the first day the lockdown began to be lifted in stages. In just one month, the population's level of mobility reduced its decline compared with pre-COVID levels from 68% to 29%. As already noted, this upturn in mobility at the end of May led to the first overnight stays at hotels during the state of emergency. June's data suggest that the recovery in domestic mobility continued to advance (around –12% at the end of the month) and it will presumably continue to improve over the coming months provided we manage to prevent the spread of the virus without having to return to strict, widespread lockdown measures.
Change with respect to the baseline* (%)
Monitoring mobility is extremely useful as it acts as a leading indicator of the mobilisation of tourist flows. However, it does not provide a completely accurate picture of the current situation or trend in consumption, whether tourism-related or otherwise. For this reason, CaixaBank has also invested a lot of effort in developing real-time indicators using big data methodology and based on card payment data via its point-of-sale terminals, taking advantage of information on the country where the payment card was issued and the type of retail business where the payment was made.3
What these indicators reveal is that consumption of non-essential goods fell to a minimum during the state of emergency, although it recovered strongly once the restrictions on mobility were lifted. As can be seen in the chart, the trend in retail consumption (textiles, household appliances, etc.) using Spanish payment cards has responded very quickly to improvements in local mobility and, since mid-June, has been at a similar or higher level than the same period in 2019. In the case of leisure and hospitality consumption, which depends largely on the local population but is also regularly consumed by tourists, there is a clear upward trend. During the last week of June, card payments for face-to-face consumption related to leisure and hospitality fell by just 1% year-on-year compared with a drop of around 95% during the state of emergency.
Nevertheless, as far as tourist expenditure is concerned, the recovery is still a long way off. Domestic tourist consumption improved very slightly after part of Spain entered phase 2 of easing the lockdown at the end of May, when public areas in hotels were reopened, and more significantly after the end of the state of emergency at the end of June, when Spaniards were once again allowed to travel between autonomous regions. However, as shown by the chart, domestic tourist expenditure still registered a 47% year-on-year drop between 6 and 12 July. As for consumption by international tourists, this improved sharply after the first few weeks of open borders for citizens from the Schengen area, posting a 74% year-on-year drop between 6 and 12 July, around 22 percentage points (pp) less than before the borders were opened. In conclusion, tourist expenditure is still at an extraordinarily low level but the improved outlook for tourist mobility following the reopening of regional and international borders between Schengen countries (80% of Spain's demand) suggest that the recovery in tourist expenditure may speed up, provided connectivity between origin and destination countries is reactivated and the pandemic remains under control.
Year-on-year change (%)
According to booking and internet search indicators, which point to future demand, interest in tourism in Spain is improving considerably. Google Trends data show that searches carried out from Spain for the term «hotel», which would illustrate domestic tourists interested in making a reservation, went from –84% year-on-year in April to –46% in the last week of June. On the other hand, foreign tourist searches for trips to Spain are picking up in key countries for the Spanish tourism industry. As can be observed in the following charts, if we compare the weekly level of searches carried out from each country with the expected level based on the historical search pattern, we can see that, in the UK and Germany, people's interest in travelling to Spain largely returned to normal during the last week of June, while in the Netherlands it was still slightly below the expected level. In France and Italy, interest was 27% and 47% lower than expected at this point in the year, probably because these are two outbound markets that offer highly competitive domestic alternatives for tourists. In the case of Italy, moreover, the government has launched a direct incentive (up to 150 euros per household) to persuade Italians to opt for a «staycation», so the prospects of Italian tourist arrivals in Spain are less favourable. Finally, in the case of the US, to which the EU has closed its borders, interest in tourism in Spain continues to fall short of its expected level.
Index (100 = historical peak)
Despite the improved outlook suggested by our analysis of the latest figures, it should not be forgotten that the current scenario is highly uncertain and will depend on striking a balance between mobility and safety until an effective vaccine or treatment against COVID-19 is found. The forecasts presented below are therefore largely dependent on the how the pandemic evolves in Spain and in the outbound markets. Our central forecast scenario assumes that the spread of COVID-19 in Spain is kept under control, although it does include the possibility of spikes which could force localised lockdown measures. We have also worked under the assumption that a vaccine or effective treatment would be available by mid-2021.4
Under these assumptions, we expect domestic tourist expenditure to pick up considerably during the second half of the year. Specifically, we predict it will reach very similar, albeit slightly lower, levels than those recorded over the same period in 2019, due to the balance of limiting and supporting factors. Firstly, the health situation will continue to hinder the recovery in demand due to (i) a perception of less safety, (ii) uncertainty regarding the evolution of the pandemic and (iii) the social distancing measures that will be maintained throughout the year. Furthermore, we believe the consequences of the current crisis on the purchasing power of households will lead many Spaniards to spend less on tourism this year for purely economic reasons. On the other hand, the factors supporting the recovery will be (i) the good connectivity offered by the road network for private transport within the peninsula, (ii) the recovery in domestic flights, which are easier to coordinate through Spain's state-owned airport operator (AENA), and (iii) the substitution of tourist trips abroad with domestic trips. This last factor looks like being one of the most decisive for the recovery in domestic tourism. Between July and December 2019, tourists who are resident in Spain spent 9.5 billion euros abroad compared with 18.8 billion euros on domestic tourism. According to our forecasts, this substitution effect could contribute about 2.5 billion euros to domestic tourism.
Consequently, if our predicted recovery takes place, domestic tourism expenditure for 2020 as a whole could fall by around 30%, some 8.4 billion euros less than in 2019 mainly as a result of the stoppage of business between March and June.
On the other hand, as can be seen in the chart, our forecasts for international tourism expenditure show a somewhat less positive trend for the rest of the year due to (i) the loss of non-EU tourism, (ii) a gradual recovery in connectivity in the EU (highly dependent on air connections and the situation of the pandemic in each outbound market) and (iii) a lower propensity to travel outside the country of residence due to uncertainty about developments in the pandemic. In short, according to our estimates, spending by foreign tourists will fall by about 25% year-on-year between July and December 2020, which would result in a decline of more than 50% for the whole of 2020 (47 billion euros less than in 2019).
Overall, domestic tourism will not be able to offset the effect of the drop in foreign demand, which accounted for 70% of tourism expenditure in 2019 and will represent around 60% in 2020. The total tourist expenditure made by both resident and foreign tourists in Spain could be around 68 billion euros in 2020, a drop of nearly 45% compared to the previous year.
The complexity of the environment in which the tourism industry currently operates also makes it necessary to take into account the evolution of the pandemic in Spain's outbound markets, making the situation even more uncertain. As can be seen in the table, which looks at 10 of the main countries sending tourists to Spain, the health and connectivity situation seems relatively favourable. Spain's dependence on European countries, where the spread of the pandemic seems to be more under control, means that the health-related prospects of a large proportion of its international tourist demand look positive.
Only the markets on the American continent, which account for less than 10% of international tourist demand in Spain, have a clearly negative outlook. In any case, although the situation in the outbound markets is good, it is still uncertain.
Making projections for 2020 is extremely complex due to the high uncertainty regarding how the pandemic will evolve. However, if we focus on the medium term, and assuming an effective vaccine or treatment for COVID-19 will have been discovered within this timescale, the upswing in international tourist confidence, the increased attractiveness of established, safe destinations during the early stages of the recovery and the rebound in the global economy all point to a considerably better outlook for Spain's tourism industry than for 2020.
As the next chart shows, we predict a relatively rapid recovery in demand in the medium term. In 2021, international tourist expenditure would reach a level higher than the one achieved in 2016, albeit still far from its pre-crisis level. Nevertheless, the sector has enjoyed some extraordinary years, in 2019 beating all records in terms of tourist volumes and expenditure, so returning to the revenue levels of 2016 could be considered as very positive.
With the shock of the COVID-19 outbreak, tourism businesses reduced their activity, destroying a large number of jobs and taking massive advantage of Spain's furlough scheme (ERTE). Tourism supply is now attempting to revive itself. The lifting of mobility restrictions has encouraged a good number of tourist establishments to reopen their doors, even though demand is still low. With the start of the summer season, it is essential for the tourism sector to maintain, and benefit from, its commitment to reactivation as this is the only way to create jobs again.
The slump in tourism demand between March and June was accompanied by the deactivation of a large number of tourism companies, which were forced to cease trading due to mobility restrictions and the impossibility of offering their services. According to data from the hotel occupancy survey, between March and May 2020 a monthly average of 4,100 hotel establishments remained open, 73% fewer than in the same period in 2019, a considerable reduction but somewhat less than the decline suffered by demand (over 90%). This is due to the fact that the sector has managed to reactivate slightly better than might be inferred from the demand figures. In May, 12% of the establishments that had been operating in February reopened their doors (mainly small establishments with low staffing needs), slightly ahead of demand due to an expected upturn in bookings.
The complexity of the current situation is such that the surveys carried out by the INE, which are traditionally used to analyse the tourism supply in this report, provide us with much less information than in the past since the number of surveys carried out on open establishments is insufficient.1 Thanks to CaixaBank's use of big data, we have been able to overcome this problem by developing an indicator that enables us to monitor the levels of inactivity for tourism supply in real time. To do so, we use the share of retail businesses with a CaixaBank payment terminal that have stopped processing any payments. As can be seen in the chart, according to this indicator the sector almost totally closed down in the period between the declaration of the state of emergency and 24 May, the date that marked the beginning of phase 2 in some parts of Spain. Since then, the revival in supply has been gaining ground. At the end of June, and for the first time since March, the share of inactive tourism businesses was below 50%, coinciding with the end of the state of emergency and the opening up of borders with other EU countries.
% of total
Tourism supply is reviving in advance of demand, reacting positively to the prospects of a recovery and the relaxation of social distancing measures. From the limitation of capacity to 30% and the closure of shared areas in hotel establishments required in phase 1 of lifting the lockdown, in many cases the capacity limit has been raised to over 70% at present, enabling establishments to exceed the demand threshold and offset their costs.2 Even so, according to internal CaixaBank data, during the second week of July 31% of tourism establishments remained inactive and hotel payments were still down by about 65% year-on-year, suggesting that most operators have probably not reached breakeven point.
Until this breakeven point is reached, it is important that economic policy measures continue to support the sector. The main support measures have been based on enabling temporary adjustments in the workforce by making the furlough scheme (ERTE) more flexible and also on providing liquidity to companies (100 billion euros with ICO guarantees for companies, with a tranche of 2.5 billion euros specifically for tourism companies), as well as a moratorium of up to 12 months on mortgage operations for properties linked to tourism business and taken out with credit institutions. All these measures, aimed at mitigating the impact of the coronavirus crisis, have been fundamental for tourism businesses to survive during the months
of little or no demand.
The sector will have to boost its transformation in order to adapt to the new parameters regarding health safety in the short term and to new demand requirements in the medium and long term.3 Indeed, the plan to reactivate tourism proposed by the government in mid-June contains measures along these lines, such as soft loans to finance sustainable solutions for tourism companies and investment in digital transformation. Expanding the role of public policy could therefore be a key lever to ensure tourism has the capacity to carry out these investments and maintain its levels of competitiveness.
On the other hand, the reduction in foreign competition for tourism within a lower demand environment such as the present may also be vital to speeding up the sector's reactivation this summer. It should be noted that British and German tourists' perception of other Mediterranean markets, such as Turkey, Egypt, Tunisia and Morocco, improved in 2019, limiting the growth of Spain's international demand.4 However, the pandemic has meant that these markets are now notably limited in terms of European visitors, not only because they are not members of the EU but also because the restrictions imposed by their governments are more severe than in the case of Spain and other Mediterranean EU member states. This can be seen in the following chart, based on the Oxford COVID-19 Government Response Tracker.
The industry's reactivation is even more in the news, if possible, because of the impact it could have on employment. Spain's labour market has suffered a terrible shock. In June, the number of people registered as employed with Social Security stood at 18.6 million, 974,000 fewer than in June 2019 (–5% year-on-year), of which around 70% were temporary workers. In addition, 1.8 million employees were affected by furlough measures; i.e. they were still registered with the Social Security system and therefore did not count as unemployed but were either not working or at least not full-time.
Employment in the tourism sector has been the hardest hit by the current situation. At the end of May, tourism-related employment stood at 2.5 million people, nearly 387,000 fewer than in the same month in 2019 (–13.5% year-on-year). This implies that 44% of the jobs lost in Spain were in the tourism sector. In addition, around 31% of tourism employees were furloughed while 5.5% took advantage of severance packages, well above the average for Spain in May, namely 9.8% furloughed and 2.0% being made redundant.
Starting from such a low level of employment, and given the traditional weight of tourism jobs in the economy as a whole (12.8% of the registered workforce in 2019), the «reopening» of the sector could have a substantial effect on employment and on moderating the number of jobs affected by the furlough scheme. Despite the fact that tourism jobs are highly seasonal throughout the year, a considerable amount of employment is generated by tourism at times of moderate demand. In other words, the bulk of the jobs are created when hotel establishments decide to open, even if the actual occupancy of the hotel is low. Logically, as the occupancy rate increases, so does the number of employees, but much more gradually. Specifically, according to our estimates, the basic staff of a hotel (those who do not depend on the occupancy rate) represent about 65% of the staff the hotel would employ if it were full. For example, an average Spanish hotel, which according to INE data consists of 49 rooms, would employ 17 workers with a 100% occupancy rate, while with a minimum occupancy rate of 35% it would employ 13. Although there is a substantial difference in employment between the high and low seasons, it should be noted that the hiring of most hotel staff is not so dependent on the seasonality of demand.
In this respect, although Spain's average occupancy rate will remain limited for the rest of the year, a small improvement in the prospects of tourist arrivals could make all the difference in reactivating the sector and the labour market as a whole.
The tourism industry is a key sector for Spain's economy and the decline forecast in tourism for 2020 will have a major impact on the country's level of economic activity. However, this economic impact will not be spread evenly throughout Spain as there are big differences between regions in the relative importance of the tourism sector. We expect the islands and Mediterranean communities to be more exposed than the average in Spain, while inland regions will suffer less.
Much has been said during the current crisis about the importance of tourism for the Spanish economy and this is understandable, given that it is one of the economic sectors that will suffer the most from the consequences of the COVID-19 crisis. According to data from the tourism satellite account published by the INE, the industry generates 12.3% of Spain's GDP and 12.7% of its employment. Tourism's huge importance for the Spanish economy is not by chance but the result of its great competitiveness and resilience. However, in 2020 the sector lies at the epicentre of the crisis affecting the Spanish economy which, according to forecasts by CaixaBank Research, will see a fall in GDP of between 13% and 15%.
Index (100 = 2019)
Due to the sharp decline in tourism expenditure expected in 2020, which we estimate at around 50% for international tourism and about 30% for domestic, the sector will no longer produce a great deal of economic activity. Specifically, according to our forecasts, tourism-related GDP will fall by around 44% in 2020, severely affecting the Spanish economy. This drop in tourism business could directly deduct 3 pp from GDP growth. Furthermore, due to the sector's strong influence on the rest of the economy, an additional 1.6 pp to 2.3 pp could be lost indirectly.1 In this case, the tourism sector would contribute negatively to Spain's economic growth by between 4.6 pp and 5.3 pp of GDP.
In the medium term, we expect tourism activity to return to its pre-crisis level from 2024 onwards. However, the activity level of 2017, a year which can be used as a benchmark given the good performance by tourism, could be regained as early as 2021.
In regional terms, the economic impact of the drop in tourism business in 2020 will be highly heterogeneous and depend mainly on the relative importance of foreign tourism and also on the importance of the tourism sector in each region's economy.
The following chart shows the projected variation in tourism expenditure by autonomous region for 2020. According to these estimates, the Balearic Islands will suffer the most from the drop in tourism expenditure (59%) due to their high dependence on foreign tourism (95% of expenditure) and also because a large part of their tourism demand (86% of the annual demand in 2019) is concentrated in the spring and summer months (those most affected by the COVID-19 pandemic). At the other end of the scale, Castilla-La Mancha and Aragon are the regions that will post the smallest decline in tourist expenditure due to their lower dependence on foreign tourism (14% and 24%, respectively). Obviously, these results depend considerably on how the pandemic evolves in the different regions.
Annual change in % and contribution in percentage points
The sector's relative importance for the region's economy is also very relevant in order to understand the economic impact of the decline in tourism, this factor also varying greatly from region to region. Since we do not have estimates of tourism's contribution to GDP per region, we have used the share of tourism expenditure to GDP to obtain an approximate measure of the tourism sector's relative weight. Using this figure, we can see that tourism is comparatively unimportant in the regions of Navarra and La Rioja (around 4% of their GDP) while its consumption accounts for more than 40% of GDP in the island communities of the Balearics and Canaries.
Fall in tourist expenditure by % of GDP
By combining the relative weight of tourism expenditure and our central forecast scenario for 2020, we can measure the economic impact on the autonomous regions, as seen in the map above. This shows how the slump in tourism business will be considerable in the Balearic Islands and Canary Islands, with declines in tourism expenditure representing 28% and 18% of their regional GDP, respectively. The Mediterranean communities of Catalonia, Valencia and Andalusia will see a more contained impact although still above the Spanish average, with a drop in tourism expenditure of more than 5% of GDP in all three cases. The Community of Madrid, the Region of Murcia, Cantabria and Galicia would register an average impact of between 2% and 4% of GDP while the rest of the autonomous regions would be less affected.
The coronavirus pandemic took the world by surprise and brought international tourism almost to a complete halt. The initial phases of a relative recovery are restoring connectivity between those outbound markets and tourist destinations that have controlled the spread of the coronavirus. However, the sector will have to undertake a far-reaching and rapid transformation to adapt to the new, post-COVID-19 international tourist who will demand more personalised, flexible and, above all, safer services.
The outbreak of SARS-CoV-2 has been a global phenomenon. As of June, more than 10 million people had been infected and 500,000 had died as a result of COVID-19 worldwide. None of the 177 countries for which statistics are published by the Johns Hopkins University Coronavirus Research Center is virus-free and more than 25% of countries have a rate of over 1,000 cases per million people.1 This situation has led to unprecedented measures being taken to limit the international and domestic mobility of citizens around the world, causing the flow of international tourists to come to a standstill between March and June.
The implications of this stoppage in tourism for the world economy are far-reaching. The World Tourism Organization (UNWTO) is considering three scenarios for 2020, depending on when global travel restrictions begin to be lifted. The less adverse and more likely scenario is a 58% drop in global tourism assuming that borders will gradually open up from July onwards, which is already happening. On the other hand, a more extreme scenario, in which border restrictions are not lifted until December, would cause a drop of up to 78%.2 Consequently, even in the least pessimistic scenario the world's number of tourists would fall to figures not seen since the last century, dealing a hefty blow to a sector that generates more than 10% of global GDP and nearly 12% of the world's employment.
according to World Tourism Organization estimates, a hefty blow to a sector that generates more than 10% of global GDP and nearly 12% of the world's employment.
A first step in understanding what the world's tourism will be like in the short term is to analyse population mobility indicators, a sine qua non for tourists to travel to their destination. Given that proximity to the tourist destination is going to be a fundamental aspect, we will look at the mobility situation within the main regions of the world: Europe, Asia and the Americas.
In Europe, lockdown measures began in Italy on 7 March, when the government introduced restrictions on people's mobility, first in the Lombardy region and shortly afterwards throughout the country. Within a few weeks, the vast majority of European countries had already implemented similar measures and people's mobility on the continent was reduced to a bare minimum to ensure the supply of essential goods and services. Looking at the mobility indicators produced by Google from Google Maps application data, we can see that the lockdown measures were extraordinarily effective in Europe (see the chart below). In just 20 days, mobility in commercial establishments throughout Western Europe fell by around 80% (from –62% in Germany to –91% in Spain). Although this gradually recovered when the lockdown started to be lifted (which began in May in many EU countries), by the end of June it had still not regained pre-COVID-19 levels: in the UK, the country that is furthest behind in lifting the lockdown, mobility is still 50% lower, while in Germany, Italy and France mobility in commercial premises is «only» 20% below pre-COVID-19 levels.
Change with respect to the baseline* (%)
Once the recovery in domestic mobility was underway, as from the end of June Europe has focused on lifting restrictions to international tourism flows. Borders have gradually started to be reopened and the mandatory quarantine measures when entering the destination country are being withdrawn. This is a somewhat more complex and delicate process, since it depends on the COVID-19 situation both in the destination region and in the tourist's home region. Nevertheless, the prospects for a revival in domestic and international tourism flows on the continent appear relatively positive, in view of several factors. The first is that many of the southern EU countries, where most of the tourist destinations are located and where the coronavirus hit the hardest, have managed to control the spread of the virus after a very strict lockdown and some spikes which, at present, appear to be localised. Secondly, the outbound markets in northern Europe, with a few exceptions, seem to have been able to detect new outbreaks and are taking the necessary measures to allow their citizens to travel in a safe and controlled manner. Last but not least, in the case of reopening borders, the EU and the Schengen area are pushing for a degree of coordination between EU countries that is unknown in any other region of the world.
has forced a high degree of coordination among EU countries that will be key to kickstarting tourism's recovery in Europe
However, while the possibilities of connecting European tourists to a wide range of destinations within the EU seem favourable, there is still a long way to go. If we look at the following chart, with data on airport connectivity in Europe's main airports between 1 January and 30 June, we can see just how far off we are. Air mobility is currently 67% below the level observed between January and February, although slightly above the figure recorded in April when it was 92% below pre-COVID levels. In light of Europe's low international mobility, it is obviously early days yet for the recovery in tourism.
Number of flights
Asia has often been used as an example when interpreting possible future scenarios for the tourism industry. This is hardly surprising as the region was responsible for 38% of global tourism expenditure in 2019 and received more than 360 million tourists a year (25% of the total). Moreover, some Asian countries are at a more mature stage in the pandemic, suggesting they might also be at a more advanced stage in the recovery. It should be noted that on 8 April the city of Wuhan, where the first outbreak of COVID-19 was detected, had just completed a 76-day lockdown. At that time, Europe was still immersed in its earliest and most severe stage of lockdown. However, there are some differences that have led to the timelines in Europe and Asia overlapping and prevent us from being able to make predictions based on the Asian experience.
According to what can be observed from domestic mobility indicators, the reaction in South East Asia was, in general, more measured than in Europe although much more heterogeneous than on the Old Continent.3 Countries such as Hong Kong and South Korea took very early but less severe measures and saw the mobility of their populations reduced by just 30%. Singapore, until it suffered a spike in early April, had barely limited the mobility of its citizens at all. India, however, is a case apart, with a much later but much more intense reaction than that of South East Asia.
Faced with this earlier but contained reaction, the Asian countries were better able to anticipate the health crisis and avoid overloading their healthcare systems, although they also delayed the time it took to control the spread of the coronavirus, to the point that, by the end of June, countries such as Hong Kong and Japan were at the same stage of lifting their lockdowns as Europe, with domestic tourism still in its early stages of recovery and restrictions on international arrivals.
Change with respect to the baseline* (%)
Number of flights
as restrictions are still in place on the entry of foreigners across the continent.
As a result, the situation is still complex for Asia's tourism industry. Looking at the air mobility data shown in the chart above, we can see how the number of flights in the area at the end of June was down by almost 60%, albeit far from the minimums recorded during the second half of April. Despite this, restrictions on the entry of foreigners remained in place in June in all countries across the region, according to data from the International Air Transport Agency (IATA). As long as there is no clear coordination between countries for the controlled reopening of borders, as in the case of the EU, tourist flows are unlikely to resume in Asia.
The health situation on the American continent is the most worrying. In the last month, 54% of new COVID-19 cases occurred in countries on the American continent. The number of positive cases in Brazil, Chile, Mexico, Colombia and Argentina tripled in June and doubled in the United States and Peru. In other words, the Americas have become the global hotspot for the pandemic. As can be seen in the following charts, the only country with a clear downward trend since May is Canada.
Positive daily cases per 100,000 inhabitants
The most worrying aspect is that this complicated health situation has occurred in spite of reduced mobility. Although the measures applied by national governments have not been as far-reaching as in Europe and there was some delay to their implementation, according to domestic mobility indicators the population of Latin American countries is 50% less mobile than usual. Mobility has improved slightly in Canada and the US, although there are doubts regarding the sustainability of this trend in the latter given the extent of the second wave. Because of this situation, the continent's tourism sector has been at a standstill since mid-March, with air mobility falling by up to 63% compared with its pre-crisis level by the end of June.
Change with respect to the baseline* (%)
Number of flights
makes it impossible for the tourism industry to recover at present.
We can therefore state that the outlook for a recovery in American tourism is particularly bad. First and foremost, the region must undertake the necessary lockdown measures to tackle the health crisis. Only when the health situation is under control will mobility be able to recover enough to revive the tourism sector. However, what we have learned from the experience of Europe and Asia is that controlling the growth of infections is a slow process and we therefore expect a very late recovery for the region as a whole.
This situation has led the UNWTO to predict a fall in international tourist flows of over 58% in its forecasts for 2020. Despite this, and under the right conditions, once international mobility gains ground the recovery in global tourism is expected to be relatively rapid, albeit remaining significantly below 2019 levels next year. The UNWTO predicts the number of international tourists will go from nearly a 100% decrease during Q2 2020 to «just» 30% below pre-crisis levels by the beginning of 2021, thanks to the recovery of European and Asian regions. It is therefore important to focus on the medium term, on what analysts have come to call «post-COVID-19 tourism».
It is unlikely that tourism will recover from the current situation without undergoing some major changes along the way. The biggest transformation, and probably the great driving force behind the renewal of the whole sector, will be how tourists want to travel. Before the sudden coronavirus outbreak, tourism demand was already showing signs of changing, albeit gradual. There was strong growth in the number of tourists choosing destinations with a higher quality supply and where a larger number of services were available, in addition to the emergence of ecologically-aware tourists who prefer sustainable, innovative destinations.
quality and sustainability as the flagships for a new kind of tourism.
The coronavirus will probably not change the direction of the trends we had already been observing but will help to speed them up considerably. Certain factors could be vital in understanding what the new post-COVID-19 tourism will be like:
1. Avoiding crowds and sustainable destinations: it seems more evident than ever that sustainability will play a key role in the future. Just a few weeks at home have made it clear that the individual action of each of us has a great environmental impact, raising the awareness of a large proportion of society. With this change in attitude, destinations that can offer a sustainable, more personalised solution will most probably become more attractive to an increasingly important share of the demand. On the other hand, as long as there is no vaccine or effective treatment, tourists will prefer destinations where social distancing can be easily maintained over more crowded locations.
2. Personalised services: Post-coronavirus tourists will appreciate being able to personalise their experience rather than the attractions of mass tourism. In other words, the added value of the tourist supply will become more important. Given this change, the winners will be those destinations focusing on smaller volume but offering unique experiences.
3. Digitisation: Future tourists will be much more digital because today's society already is. We must not forget that we live in a world where the use of digital media has increased dramatically due to the need to stay connected at home, both for work and personal reasons. As a result, many citizens who previously had not mastered digital channels now appreciate them and are likely to demand them when travelling.
4. Safety and health: Certainty has always been a very important factor when choosing a tourist venue and, after a shock like the coronavirus, accessibility to and the quality of the healthcare system will be factors to take into account when deciding on a location.
5. Closeness and connectivity: This article has already mentioned that connectivity is a fundamental factor for tourism; an obvious but nonetheless vital fact. It is very likely that the first connectivity channels to be reactivated will be those of medium and short range. Until a vaccine is available, short-range tourism (domestic and nearby countries) will offer many more options for tourists and greater certainty should they want to return home. Similarly, those destinations that can offer a convenient connection could significantly improve their prospects.
The changes in the way tourism is carried out must be accompanied by an effort to transform the supply, which needs to focus on innovation and on offering a larger number of services, the expansion of less exploited destinations, an improvement in connectivity and, in short, something the sector itself has been focusing on for years: quality rather than quantity.4 This is therefore the right time to speed up the investments required to adapt the sector to this new global tourism market. Mobilisation of the sector's business community will be key, as will support from public administrations, not only to overcome this crisis but also to ensure the industry remains a sustainable pillar of our economy in the future.
In conclusion, it is clear that the current situation is one of unprecedented complexity for the global tourism sector, both in the short and medium term. In 2020, global tourism demand is likely to be less than half of what it was in 2019 and will continue to be hugely dependent on the recovery of people's mobility and our ability to maintain a contained and controlled level of infection until an effective coronavirus vaccine or treatment is discovered. Given this situation, Europe can be seen as a pilot project for the revival of global tourism because it has succeeded in reactivating people's mobility and has embarked on the process of reopening borders. In the medium term, changes in society will speed up the trend towards new types of tourism. As a result, the supply will have to be adapted even more quickly than was already occurring towards a more sustainable, digital, safe and good quality tourism.
The COVID-19 pandemic has highlighted the importance of the agrifood sector as a mainstay of the Spanish economy. During the months of lockdown, the entire food chain (which includes farmers, breeders, fishermen, cooperatives and the food industry, wholesalers, retailers, distributors and logistics operators) had to adapt quickly to secure the population's food supply. In retrospect, it is only fair to acknowledge the excellent response by the whole sector in tackling this challenge.
The pandemic has highlighted the strategic nature of the agrifood industry as an essential activity to supply the population with food. The sector has therefore been one of the least affected by the crisis: the primary sector's relative share of the total economy increased and the agrifood industry posted a much smaller decline than manufacturing industry as a whole in Q2 2020. Labour market trends have also been relatively favourable, with relatively few job losses and a smaller proportion of workers affected by furlough measures.
At this point in the pandemic it is well-known that the crisis caused by COVID-19 is having an unprecedented impact on the world's economy, and on the Spanish economy in particular. The strict lockdown measures in place for much of Q2 2020 and restrictions on international tourism led to a historic fall in Spain's GDP, down by 17.8% quarter-on-quarter (21.5% year-on-year), the largest drop observed since 1995 (the year the National Statistics Institute started to produce this homogeneous series). In comparison, other nearby European economies recorded a very sharp but clearly smaller decline in economic activity. In quarter-on-quarter terms: –11.8% in the euro area as a whole, –9.7% in Germany, –13.8% in France, –12.4% in Italy and –13.9% in Portugal. Only the United Kingdom posted a larger decline than Spain's economy in Q2, namely –20.4% quarter-on-quarter, as in addition to being hit hard by the pandemic it is also immersed in the complex process of finalising Brexit.
the summer months, the economic recovery is still incomplete, fragile and uncertain.
Available activity indicators for Q3 suggest the Spanish economy rebounded remarkably well thanks to the lifting of the restrictions on people's movements. However, there are signs of a slowdown in this improvement due to the sharp rise in the number of confirmed COVID-19 cases and the new measures being taken to curb the spread of the disease. It is estimated that, in the last quarter of the year, activity could be 12% below the previous year's level. The recovery is therefore still incomplete and the severity of the reduction in activity means that it will take years to regain pre-crisis levels. Specifically, CaixaBank Research's macroeconomic scenario predicts this will not happen until 2023, although it should be remembered that the degree of uncertainty surrounding economic forecasts is unusually high.
Within this context of a dramatic reduction in activity, the agrifood sector has reported highly favourable and even counter-cyclical trends. The primary sector's gross value added grew by 3.6% quarter-on-quarter (6.3% year-on-year) in Q2 2020, a quarter during which most of Spain's population was under lockdown and the consumption of essential goods rose considerably. The primary sector therefore increased its share in the overall economy in Q2, contributing 3.8% of GDP compared with 2.7% in 2019.
very well as a supplier of basic goods for the entire population.
The trend in the agrifood industry has also been positive compared with the manufacturing industry as a whole, much harder hit by the lockdown. Specifically, while total manufacturing output fell by 26.7% year-on-year during April-June, the decline in food production was less pronounced, at –9.4%. In August (latest figures available), the industrial production index for the food sector continued to recover and was only 1.3% below its pre-crisis level. Electricity consumption by business sector also shows that the agrifood industry was operating at almost full capacity during the most critical months of the pandemic: while industry's electricity consumption fell overall by 16.3% year-on-year in
Q2 2020, it was barely 1% less in the food industry.
The extent to which employment altered during the months of lockdown and its subsequent recovery has been very uneven across different sectors. In the primary sector, the number of workers registered with Social Security fell by 1.9% year-on-year in Q2 (compared with –4.4% for all such workers) while in the agrifood industry it fell by 2.4% (compared with –3.7% for the manufacturing industry as a whole).
Moreover, the agrifood industry has not tended to use the measures implemented to contain job losses (the furlough scheme and extraordinary allowances f11 By contrast, the percentage of furloughed employees in the primary sector was just 0.5% (around 4,000 people) and 11.8% in the agrifood industry (compared with 18.3% in manufacturing). The percentage of self-employed workers without work in the primary sector reached 3.5% in May (compared with 43.7% for the economy as a whole and 34.1% for manufacturing).2
and a lower proportion of furloughed workers, and the recovery in the number of workers registered with Social Security has consolidated during the summer.
he most recent data, for the month of September, show that the recovery in registered workers has got stronger over the summer. Both sectors have posted smaller decreases than in previous months: –0.1% and –1.3% year-on-year in the primary sector and in the agrifood industry, respectively. Moreover, September has seen the notable return to the labour market of furloughed workers: only 0.1% and 2.8% of employees in the primary sector and agrifood industry were in this situation, respectively (compared with 4.8% of total employees). The furlough scheme has therefore been hugely effective in safeguarding labour relations during the toughest months of the pandemic.
During the months of lockdown there was a radical change in food consumption patterns in Spain. Using internal data on spending with Spanish and foreign cards via CaixaBank POS terminals, we can see that expenditure in supermarkets and large food stores picked up noticeably during the state of emergency. Online shopping also increased, partly to minimise travel and contact between people, whereas consumption in restaurants plummeted. Despite the fact that, during the summer, household expenditure on restaurants picked up strongly, the slump in foreign tourism continues to be particularly detrimental to establishments geared towards international clients.
Before the coronavirus crisis, Spanish households used to consume a significant part of their food outside the home. Specifically, 36.5% of food expenditure in 2019 (8.6% of total household expenditure, equivalent to 48.5 billion euros) was spent outside the home.1The arrival of the coronavirus and strict measures restricting mobility to stop it from spreading radically changed families' consumption patterns; they stopped frequenting restaurants and other catering establishments to consume food almost exclusively in their homes.
while restaurant spending plummeted. The entire food chain had to adapt quickly to the changes in household consumption patterns.
According to data on payment card activity via CaixaBank POS terminals, during the state of emergency spending on supermarkets and large food stores grew by nearly 50% year-on-year. The week of 9-15 March saw a 90% increase; i.e. card purchases almost doubled compared to the same week last year, mainly due to the stockpiling of food by many households and, to a lesser extent, the increased use of cards instead of cash as a means of payment. The pandemic tested the food chain's resilience and ability to adapt to a surge in demand, the greatest stress it has been put under in recent history. In hindsight, it is only fair to acknowledge the excellent response by the entire sector in meeting this challenge and securing food supplies for the entire population at all times.
From July onwards, with the relaxation of lockdown measures, a gradual slowdown in food expenditure began to be observed. However, demand is still unusually high: at the end of September, card expenditure on food was still 20% higher than the previous year, showing that the health crisis is still affecting household consumption patterns.
Here, too, companies showed themselves to be highly flexible and adaptable in responding to new consumer needs.
Although all food product distribution channels have seen their sales increase, the rise in online shopping was particularly notable. Although the sector was not always able to respond to the peak demand via this channel during the first weeks of the state of emergency, after a short time many companies had already expanded their logistics capacity and workforce to meet consumers' new needs. Specifically, payments via CaixaBank virtual POS terminals recorded a considerable upturn in online shopping from the second half of April and growth rates are still strong, close to 60%. As a result, the market share of e-commerce has increased significantly: from 1.6% in 2019 to 2.4% between 9 March and 6 June 2020, according to data published by the Ministry of Agriculture.2
Another interesting figure that allows us to assess the degree of penetration of online food purchases comes from the CIS barometer which, in May, included several questions on consumption habits and trends during lockdown. The barometer revealed that 20% of respondents had purchased food products via online channels during lockdown, a percentage very similar to those who had purchased computers and IT equipment and only exceeded by purchases of clothing, fashion and footwear (27.7% of respondents). This survey also revealed that 67% of respondents made face-to-face purchases less frequently and that 19% preferred neighbourhood and local stores (compared to 12% before the state of emergency).
selectively damaging some sub-products that depend on the food service industry for their final consumption.
The agrifood sector, however, has also suffered from the crisis. Shutting down the Spanish economy to stop the spread of the pandemic significantly affected the hotel and catering industry, which accounts for a third of the industry's total turnover, especially affecting those sub-sectors whose production is almost entirely aimed at this channel.
As can be seen in the chart above on CaixaBank POS terminal activity, spending on food service establishments plummeted with the onset of the state of emergency, posting falls of over 90% between the second half of March and the end of April. In May, food service expenditure using Spanish cards began to recover relatively quickly, picking up considerably in the summer months.
However, foreign card spending on food service has suffered a severe blow and has yet to show signs of recovery. While there was some improvement in July and August (–60% year-on-year compared with falls of over 90% during the state of emergency), in September the drop was once again severe (–80% year-on-year). The maps above show the trend in expenditure on food service in July and August 2020 compared with the same period in 2019 at a municipal level. The predominant colour on each map is evident: green in the map on the left, corresponding to Spanish cards and indicating positive year-on-year growth in most municipalities; and red in the map on the right, reflecting the decrease in foreign card expenditure on food service this summer. The islands and the Mediterranean basin have been hardest hit because of their greater dependence on tourism.
The food service sector is certainly very dependent on tourism. According to CaixaBank's own data, 21% of card expenditure on bars and restaurants in 2019 was made with foreign cards (see the table below), a percentage that rises to 37% for gastronomic restaurants. In addition, 15% of expenditure was made with Spanish cards from a province other than the one in which the establishment is located (an indication of dependence on domestic tourism).3 In the case of gastronomic restaurants, almost half their turnover depends on domestic and foreign tourism. Moreover, in many cases these are highly seasonal businesses that have been hugely affected by the collapse of international tourism during the summer. In July and August, foreign tourist arrivals in Spain totalled fewer than 5 million compared with 20 million in 2019 (–75% year-on-year).
The collapse of international tourism has significant implications for the demand of food products. According to an analysis of the input-output tables, for every euro of turnover in accommodation and food services, 30 cents are demanded from the agrifood sector.4 In other words, any shock to tourism is passed on through the food chain to those who supply food to these restaurants, products that are less frequently consumed at home and therefore face significant difficulties in finding an alternative market.
Among the products most affected at the beginning of the lockdown were lamb and goat meat, sheep and goat's milk, fresh fish and wine, among others. In response to this situation, some small producers formed alliances to develop online distribution channels and promote local sales, revealing a great capacity to adapt to an exceptional situation. Even the Minister of Agriculture himself, at the beginning of the state of emergency, called on households to consume products that had particularly suffered from the closure of the food service business.
Recent developments in the pandemic in Spain does not allow us to be too optimistic about international tourism's prospects for recovery in the short term. Until there is an effective vaccine or treatment against COVID-19, tourist numbers are likely to remain very low. However, once we have overcome the pandemic, the excellent position enjoyed by Spain's tourism industry before the crisis suggests it will recover strongly in the medium term.7
Technology is advancing at a frenetic pace and offers the agrifood chain a large number of opportunities to make its production more efficient and sustainable. Moreover, the arrival of COVID-19 has shown that the most digitalised companies were able to continue their activities more readily than the rest. In this article we examine the degree of popularity of the different digital technologies used in the primary sector and agrifood industry based on a text analysis of over 2 million tweets on Twitter. All these technologies are essential to create a connected ecosystem that will make up the Food Chain 4.0 of the future.
The unexpected arrival of the pandemic has shown that the most digitalised companies were more prepared to adapt to the new situation and were able to continue to operate much more smoothly than the rest. There is no doubt that, in this new environment, the digital transformation of companies is now unavoidable in order to boost their competitiveness.
Big data, robotics, the internet of things and blockchain are just some examples of the new digital technologies gradually being adapted by firms, particularly in the agrifood sector. Technology is advancing at a frenetic pace and is offering the agrifood chain a large number of opportunities to produce more efficiently and sustainably. However, statistical information on the degree to which such technologies have been taken up, and the most comprehensive official statistical source1, does not provide information on the primary sector. Below we present a novel analysis of the «popularity» of new digital technologies in the agrifood sector based on data from Twitter.
Data from Twitter can be extremely valuable in detecting new trends as it allows us to analyse the popularity of certain terms according to how frequently they appear in tweets. However, it is true that «talking about something» is not the same as successfully implementing the various digital technologies in a company's recurring operations. For this reason the results presented below should be interpreted simply as an indication of new trends that may be taking root in agrifood companies.
are in the agrifood sector according to how often they are mentioned in tweets.
For this study, data was processed from over 24 million tweets sent by individual users and digital media during the period 2017-2019. Among these, 2 million corresponded to the agrifood sector. Using natural language processing techniques, the tweets were categorised according to mentions of different digital technologies and to the business sector.2 The key to obtaining relevant data from social media is to first define «seed» words or phrases to identify texts corresponding to each of the business sectors, as well as «seed» words or phrases related to the different digital technologies of interest.3 Using a machine-learning algorithm, other words and phrases related to the concept in question that were not initially included were also identified, thus broadening the spectrum of texts analysed. At this stage, it is important to carefully screen for polysemous words (i.e. those that have more than one meaning, such as the word «reserva» in Spanish, which can be used to refer to a hotel booking as well as an aged wine).
To assess the agrifood sector's degree of digitalisation according to data from Twitter, we first need to know how common tweets about digitalisation are in other business sectors. The most digitalised industry according to our analysis is the information and communication technologies (ICT) sector: 3.2% of the sector's tweets contain terms related to digitalisation, a result that is not surprising given the very nature of the industry. Next comes finance and insurance with 2.7% of the tweets.
This percentage is obviously lower in the primary sector at 0.6% but it is similar to the 0.7% for professional, scientific and technical activities. In the case of the agrifood industry, the percentage of tweets on digitalisation is only 0.3%, very close to the basic manufacturing sector (which includes the textile, wood, paper and graphic arts industries), with the lowest percentage among the sectors analysed, 0.2%.
The wealth of data obtained from Twitter allow us to identify the most popular digital tools in each business sector according to how frequently they are mentioned in the tweets examined. According to our analysis, a large proportion of the primary sector's tweets about digitalisation tend to include issues related to big data (45% of all tweets about digitalisation). One clear example of the application of big data in the sector can be found in «precision agriculture» techniques which require large amounts of data to be analysed to optimise decisions and thereby increase production and, in turn, ensure sustainability. These techniques are used, for instance, to calculate the irrigation requirements of crops by taking into account climatic conditions (sunlight, wind, temperature and relative humidity) and crop characteristics (species, state of development, planting density, etc.). To carry out this calculation, real-time updated meteorological data, a large computing capacity and fast data transmission speeds are all required for an automatic irrigation system to be properly adjusted. This technology helps to use water more efficiently, a highly relevant aspect in areas with a Mediterranean climate that are extremely vulnerable to climate change and where water is in short supply.
indispensable for advancing the application of precision agriculture techniques and smart automated farming.
Other popular technologies in the primary sector are the internet of things (16% of tweets) and robotics, including drones (10% of tweets). The new digital technologies promise to revolutionise the field of agriculture and stockbreeding by the middle of this century, the same as the mechanisation of farming in the xxi century. Agricultural Machinery 4.0 (which is closer to the robots in science fiction films than to the tractors we are used to seeing on all farms in the country) helps to increase productivity whilst also improving working conditions in the field. This trend towards more automated agricultural tasks has become stronger in the wake of the coronavirus pandemic, as the difficulty in recruiting seasonal workers due to international mobility restrictions has led to increased interest in robotics and agricultural automation. In fact, companies that manufacture robots for agriculture have seen a sharp increase in orders, such as robots that pick strawberries while removing mould with ultraviolet light.14
The use of drones warrants particular attention as this has grown exponentially in recent years and applications are increasingly widespread: from the early detection of pests and the aerial inspection of large areas of crops to locating wild boar with heat-sensitive cameras to prevent the spread of African swine fever to domestic pigs.5
Blockchain is the technology that stands out most in the food sector (30% of the total number of tweets on the sector's digitalisation) and this comes as no surprise as it has many different applications for the food and beverage industry. Producing a chain of unalterable, reliable records, blockchain makes it possible to guarantee the complete traceability of products throughout all the links in the food chain. Simply scanning a QR code provides access to all the data regarding the origin, production method, veterinary treatments received, ingredients used, etc. A large number of agrifood companies are already experimenting with blockchain as it offers clear benefits in terms of transparency regarding origin, product quality and food safety, aspects that are increasingly valued by consumers. Blockchain technology is also being used to limit food waste, another essential challenge for the sector.
making them traceable throughout the links in the food chain.
There are some digital technologies that are not very popular across all economic sectors, perhaps because they have a more limited or specific range of application. These are technologies that, despite having a low percentage of tweets in absolute terms according to our study, may be relatively popular for a particular sector compared with the rest.
To detect such cases, we have calculated a new metric, namely a concentration index which takes into account the relative popularity of technologies in a sector compared with the rest of the sectors.6 By using this methodology, we have found that the primary sector continues to stand out in terms of big data. Specifically, the primary sector concentrates 9.2% of the total number of tweets mentioning big data made by all sectors, a much larger proportion than the 3.1% share of primary sector tweets out of the total number of tweets analysed (as can be seen in the following table, in this case the concentration index is 3). We have also determined that the sector is particularly interested in the internet of things, as already mentioned, but have discovered that nanotechnology is also a relatively popular technology in the primary sector. In other words, although only 3.8% of the tweets in the primary sector deal with nanotechnology, this percentage is high compared with the 1.7% share of nanotechnology tweets out of the total (in other words, this technology is not very popular in general across all sectors but is slightly more popular in the primary sector than the others). This find is not surprising since genetic engineering is one of the fields in which technology has advanced most in order to boost crop yields. For example, by optimising the yield of vines it is possible to develop plants that are much more resistant to extreme weather conditions and pests.
Finally, virtual and augmented reality is also a relatively popular technology in
the agrifood industry. Specifically, the agrifood industry concentrates 6.2% of the total virtual and augmented reality tweets made by all sectors, a percentage that more than doubles the 2.5% share of primary sector tweets out of the total number of tweets analysed (the concentration index is equal to 2.5 in this case). This technology uses virtual environments (virtual reality) or incorporates virtual elements into reality (augmented reality) that provide additional knowledge and data that can be used to optimise processes. At first it may be surprising that this technology is relatively popular in the agrifood industry but its uses are spreading as the industry implements digital technologies in its production processes, in the so-called Industry 4.0. One specific example of how this technology is used is in repairing breakdowns. When a fault occurs, operators can use augmented reality goggles to follow the steps contained in virtual instruction manuals that are projected onto the lens to help resolve the incident. The glasses recognise the different parts of the machine and visually indicate to operators where they should act to solve the specific problem.
There are numerous examples of new digital technologies being applied in the agrifood sector. We are witnessing a revolution that is destined to transform the different links in the food chain: from the exploitation of data and the use of drones to make harvesting more efficient to implementing blockchain technology to improve the traceability of the final products that reach our homes. In short, the future will bring us the Food Chain 4.0, a totally connected ecosystem from the field to the table.
Agrifood exports have continued to perform very well during the pandemic within a context where international trade has been particularly hard hit by the crisis. Swine meat, fruit and some fresh vegetables have been in greatest demand, while the Basque Country and especially Aragon have been the regions posting the largest growth in exports between January and July 2020. Despite this favourable performance to date, however, the sector is keeping a close eye on developments in global trade tensions, especially between the US and EU and the Brexit negotiations.
The agrifood industry is a mainstay of the foreign sector for the Spanish economy. In 2019, sales abroad totalled 50.36 billion euros, 5.9% more than in 2018, accounting for 17.4% of all goods exported. Spain is a major exporter of agrifood products: it is the fourth largest exporter in the sector in the EU, behind only the Netherlands,1 Germany and France, and globally it overtook Canada in seventh place in the world ranking of food-exporting countries in 2018 (latest available WTO data), with a global market share of 3.6%, well above the 1.8% share for all goods exports.
it ranks fourth in the EU and seventh in the world.
Since last March, the COVID-19 pandemic has had an extraordinarily negative impact on international trade. However, in spite of this general pattern of decline, Spanish agrifood exports grew by 4.9% year-on-year between January and July 2020. Exports from the primary sector were stronger, posting a year-on-year increase of 6.3% in the year to July, while exports by the agrifood industry rose by 4.1% in the same period. Such growth contrasts with the decline in all goods exports (–14.6%), so that the share of agrifood exports out of the total has grown significantly, reaching 30% in April. Agrifood imports also increased during this period but to a lesser extent, so that the external trade surplus of agrifood goods reached a record high in July: 1.30% of GDP (compared with 1.06% in 2019).
Spanish agrifood exports have performed very well.
The meat sector has led the growth of agrifood exports with a 25% year-on-year increase between January and July 2020, thanks to the rise in sales of swine meat (+35%).2The second group of products with the largest increase is that of canned meat or fish (+13.2%). Next come the product groups of oilseeds and coffee and tea, up by more than 10% but with a smaller share of all exports (close to 1%). More significant is the progress made by fruit (+9.4%), the most exported group (17.6% of all agrifood exports in 2019).
have led the growth of Spanish agrifood exports during the pandemic.
Among fruits, citrus (TARIC 0805) and apricots, cherries, peaches, plums and sloes (TARIC 0809) have seen strong growth (+18.2% and +17.2% year-on-year until July, respectively). Pulses and vegetables, which accounted for 13.1% of all agrifood exports in 2019, performed more modestly in the first seven months of 2020 (4.3%) but some products such as carrots, cucumbers and cabbages posted very significant increases. On the other hand, some product groups have recorded declines, such as fish, crustaceans and molluscs –15.7%), beverages (–5.2%) and fats (–5.4%). In particular, olive oil exports have fallen by 7.4% year-on-year and wine by 5.4%, although both products are still in the top 5 of exported agrifood products.
Aragon is the autonomous region with the highest growth in exports in the first seven months of 2020 (+33.8%) thanks to its specialisation in swine meat (TARIC 0203), whose demand has picked up strongly, especially from Asian countries. This is followed by the Basque Country (+13.3%) due to the upturn in exports of chemically modified fats and oils (TARIC 1518); Catalonia (+8.8%) also benefited from the boom in swine meat exports and Valencia recovered (+7.6%) due to the effect of citrus products (+16.7%, more than 200 million euros compared with the same period in 2019), in great demand by our trading partners during the COVID-19 crisis. At the other end of the scale were the Balearic Islands and Canary Islands with very sharp falls in their agrifood exports (–28.4% and –25.0%, respectively). Although the share of these exports out of the total exports of island goods is quite low (4.7% and 9.0%, respectively, compared with 17.4% for Spain as a whole), these are not good figures for economies that have already been very hard hit by the huge crisis in the tourism industry.
EU countries are the main destinations for Spanish agrifood exports, with France and Germany at the top. Both destinations have performed very well in the first seven months of 2020, with advances of 4.7% and 9.5% year-on-year, respectively. They are closely followed by Italy and Portugal which received 9.8% and 8.9% of Spanish agrifood exports in 2019, respectively. These two markets, however, have shown some weakness this year.
Uncertainty over future trade relations with the UK and trade tensions with the US have not marred the sector's excellent performance.
In fifth position is the United Kingdom, with 7.7% of the total and the first non-EU destination. Between January and July 2020, exports to the UK grew strongly (6.8% year-on-year), a remarkable fact given the sharp decline in the country's economy in Q2 2020. It is clear that the high level of uncertainty regarding the rules that will govern trade relations between the UK and the EU from January onwards is causing some concern in the sector.
In the hypothetical case that the relationship between these two parties would ultimately involve tariffs, agrifood products (along with textiles and, to a lesser degree, motor vehicles) are among the goods to which higher tariffs, on average, would be applied, according to a Bank of Spain report.3 The same report identifies Murcia as one of the regions that could be most affected by a hard Brexit (or lack of agreement) due to the large volume of fruit and vegetable exports it sends to the UK market. In any case, the study also points out that the vulnerability to Brexit of Spanish exporters to the United Kingdom is partly offset by their relatively high level of productivity and the degree of geographical diversification of their exports.
China is the second largest non-EU destination for Spain's agrifood exports, a figure that practically doubled in the first seven months of 2020 compared with the same period last year (+94.1%). This exceptional performance is due to swine meat exports to the country (+216%), still affected by African swine fever.
The next country in the ranking is the United States, with almost 2 billion euros of exports in 2019, 3.8% of the total. However, the recent trend is not very positive since, between January and July 2020, there was a slight decline of 1% year-on-year. This decrease could be related to the higher tariffs (from 3.5% to 25%) imposed by the US on certain agrifood products on 19 October 2019, a decision under the WTO ruling on state aid to Airbus that authorized the US to impose countermeasures to the EU worth 6.8 billion euros, which affected Spain to the tune of about 790 million euros.
The table below details the trend in exports of the main products affected by these measures. It can be observed that Spanish exports to the US of olive oil, fatty cheeses and biscuits are performing well in spite of the tariffs. In fact, exports of these products to the US are growing more than to other destinations. On the other hand, the trend is very bad for wine, olives, certain types of swine meat and lemons. Perhaps the most worrying case is that of olives, as 22% of these exports went to the US in 2019. On the other hand, the share of the US market for other products is lower, so it may be relatively easier to redirect these to other markets.
However, although the figures do not seem alarming, it should be noted that there is a high degree of uncertainty surrounding the policies that will govern Europe's future trade relations with the US. Trade has been the US government's battleground since the beginning of 2018 when it began its bitter disputes with China as well as the EU, albeit to a lesser degree. Although there was some rapprochement at the end of August (in the end, the US did not carry out its threat to raise tariffs already imposed on European products in October 2019), recent restrictions on technology clearly indicate that trade tensions could easily return and affect the sector again. On the other hand, it is also important to note that the EU is still pushing its trade policy agenda, reaching bilateral trade agreements with other countries such as Canada and Japan, which could open up new opportunities for the agrifood sector.
Activity in the real estate market is recovering from its extraordinary slump between March and June. House sales and new building permits have regained much of the ground lost in Q3 2020, a trend we expect to consolidate in 2021. House prices, whose trend is still weak but without any extreme corrections, are expected to follow a similar trend in the coming quarters, ending 2021 with a decline of around 2%.
Throughout the summer, after the pandemic peaked in March, April and May, the global economy saw a remarkable, widespread recovery in most countries. Nevertheless, the latest indicators point to the second wave of COVID-19 rapidly cooling down this recovery, so we cannot rule out a further decline in activity in Q4 2020. However, it is very important to note that the economic impact of the latest restrictions on people’s movements is clearly less than the effect of the severe lockdown in Q2.
Spain’s economy also recovered strongly in Q3 2020 post-lockdown. Specifically, after decreasing by 17.8% in Q2 2020, Spain’s GDP grew by a significant 16.7% quarter-on-quarter in Q3 2020, confirming the economic recovery despite the fact that it is still 8.7% below its Q3 level last year. However, as has happened in the major international economies, the latest indicators point to this recovery cooling down and a more dubious tone for economic activity in Q4 due to the second wave of COVID infections.
The second wave of the virus has led us to lower our forecasts for 2021, although the recent progress made in health measures provides
a note of optimism.
Not surprisingly, the recent turn of events, worse than anticipated a few months ago, has affected growth prospects. CaixaBank Research’s current scenario predicts 6.0% GDP growth1 in 2021, still a notable recovery but less than previously forecast (8.6%). This scenario is based on a series of hypotheses, including the likelihood that the COVID-19 vaccine will be available in the first few months of the year, in principle for the most vulnerable people, and that other measures will be implemented to diversify the health strategy (such as the mass testing of the population using low-cost, rapid tests), which would support economic activity and ensure a more resilient recovery. However, Spain’s GDP is not expected to reach its pre-crisis levels until 2023, somewhat later than our main European partners given the greater relative weight of tourism in the country’s economy, a sector that will continue to perform well below its potential.
As for the real estate market, activity has also been recovering after going through a slump of unprecedented magnitude during the lockdown. House sales and new building permits have picked up considerably since the summer, a trend we expect to consolidate in 2021. Moreover, the effect of the crisis on house prices has been relatively moderate so far, although we are still expecting some correction in the last few weeks of 2020 and the first half of 2021. Consequently, throughout 2021 the real estate sector will continue to recover gradually from the pandemic’s severe impact.
Demand for housing has recovered very quickly since the summer. The number of house sales fell only very slightly in September (–1.1% year-on-year), leaving behind the slump observed during the lockdown (–36% year-on-year between March and July). However, there is a significant difference between the sales trends for new and second-hand housing: while sales of new builds have recovered strongly (+29.2% year-on-year), second-hand house sales have continued to decline in year-on-year terms, albeit more slowly than in previous months (–7.4% year-on-year in September compared with –16.1% year-on-year in August). As a result, sales of new builds now account for 22.2% of all house sales, compared with 18.4% in 2019.
One interesting point is the significant rise in sales of houses as opposed to apartments during the pandemic, the historical series reaching a peak in Q3 2020 with 20.4% of all transactions recorded for the quarter.2 This indicates a certain change in consumer preference as people are now looking for larger homes with more outdoor space, such as terraces and gardens, after experiencing months of enforced lockdown due to the health crisis.
Also noteworthy is the strong recovery in house purchases by foreigners3 in Q3 2020 (+42.5% quarter-on-quarter), after the sharp drop in Q2 (–46.6% quarter-on-quarter), bringing the relative share of foreign purchases to 11.4% compared with 10.7% in Q2. In absolute terms, this translates into nearly 11,400 sales to foreigners in Q3 2020 compared with 8,000 in Q2, a figure which, however, is still far from the 15,000+ in Q1 and one year ago. As usual, the British, French, Germans and Belgians are the main buyers of Spanish properties, usually for holiday purposes. These nationalities are followed by the Moroccans and Romanians, who tend to buy housing for residential purposes. The Italians, Swedish, Dutch and Russians complete the top 10 of buyers by nationality.
the worsening economic situation may again compromise demand over the coming months.
We expect the rate of growth in sales to ease slightly over the next few months. Firstly, because most of the sales that had to be postponed during the lockdown due to mobility restrictions will have now gone through. And, secondly, due to the impact of the economic situation on the gross disposable income of households. Although the labour market has evolved very positively post-lockdown (the Q3 2020 labour force survey (LFS) shows a strong recovery in the total actual hours worked and a 3% increase in employment compared with Q2), recent months have seen a reduction in the reinstatement of furloughed workers from the first wave, with the addition of furloughed workers from the second wave. At CaixaBank Research we therefore expect the unemployment rate to rise significantly in Q1 2021 (to 19%) due to higher job losses in the coming months. However, job creation should gain momentum in Q2 2021, especially in view of the summer, provided our hypothesis is confirmed that the epidemiological situation will allow the tourist season to operate relatively normally.
(essentially sustained growth in employment, recovery in wages and foreign demand) will remain weak until the epidemiological situation improves.
For their part, financial conditions will continue to support housing demand. Over the coming months, the ECB is very likely to extend some of the monetary policy measures it quickly and forcefully implemented at the start of the pandemic (from asset purchases estimated at almost 2 trillion euros in 2020-2021 and injections of liquidity under very favourable conditions to the easing of regulations and collateral requirements). One reflection of the effectiveness of these measures is the continued improvement in credit to households in order to purchase housing (–6.9% year-on-year in cumulative terms from January to October compared with –37.3% year-on-year between March and May). On the other hand, the Q3 bank lending survey indicates slightly tighter terms and conditions on loans to households for house purchases, although the overall terms and conditions for new loans remain unchanged.4
According to national accounting data, construction has been hit hard by the coronavirus crisis and is taking longer to rebound than the economy as a whole. Specifically, the gross value added (GVA) for construction, in real terms, fell by 17.1% in the first half of 2020 while GDP fell by 12.8% over the same period. Although the construction industry’s GVA rose by 22.5% quarter-on-quarter in Q3 2020, it is still 11.0% below the level recorded a year earlier. To put these figures into perspective, however, it should be noted that the GDP of the economy as a whole is 8.7% lower than in Q3 2019. On the other hand, the number of new building permits has fallen significantly, by 23.6% between January and September 2020, although this is a considerable improvement compared with the 37.2% drop recorded in the second quarter. The following chart shows that the number of permits granted up to September 2020 is similar to that of 2017, a year which closed with around 80,000 new building permits, a figure that coincides with our current forecast for new building permits in 2020.
By 2021, we expect the number of new building permits to gradually rise to 90,000. This would bring the production of new housing in line with the net creation of households over the past 12 months (also estimated at 90,000 by the Economically Active Population Survey or EAP). However, it is important to note that the National Statistics Institute (INE) has substantially lowered its projections for net household creation in the next few years. Specifically, the INE forecasts that approximately 60,000 households will be formed per year between 2021 and 2025, less than half the 135,000 households per year projected two years ago. These projections assume considerable flows of foreigners into Spain, taking into account the fact that the number of households made up of Spaniards is expected to fall by around 100,000 per year.
EPA data show that employment in the construction sector recovered particularly strongly in Q3 2020, with the year-on-year rate rising to 1.6% compared with –8.4% in Q2. However, in effective terms the hours worked provide a better indication of the trend in employment. These figures indicate that, in construction, the actual hours worked in Q3 were already slightly higher than their level a year earlier, up by 0.5%. Moreover, it should be noted that construction workers who had been furloughed have now rejoined the labour market. Whereas these workers accounted for 35.2% of all construction employees in April, by October their percentage had fallen to 3.4%.5 Furlough measures have therefore been a highly effective means of safeguarding jobs during the toughest months of the pandemic.
So far, the impact of the coronavirus crisis on house prices has been relatively moderate due to their high inertia in changes of cycle. According to the statistics published by the Ministry of Transport, Mobility and Urban Agenda (based on appraisal prices), house prices rose by 0.6% quarter-on-quarter in Q3 2020, interrupting the downward trend of the previous two quarters. In year-on-year terms, the decline in prices slowed down (–1.1% year-on-year versus –1.7% in Q2), while the College of Registrars’ price indicator (based on repeat sales) recorded a 0.2% quarter-on-quarter drop in Q3 2020. Although the year-on-year trend is still positive (0.8%), this indicator shows a marked slowdown compared with the 7.3% year-on-year increase recorded in Q3 2019. INE house prices (based on transaction prices) also slowed down, from 3.2% year-on-year growth in Q1 to 2.1% in Q2, but this indicator has yet to post a decline in quarter-on-quarter terms. INE data suggest that prices for new builds are outperforming those for second-hand housing. Specifically, the price of new housing rose by 4.2% year-on-year in Q2 2020 while the price of second-hand housing rose more moderately by 1.8%.
Another indicator that is particularly relevant in situations of high uncertainty such as the present is the time it takes to sell a property, as this can point to buyers and sellers finding it more difficult to agree on the new equilibrium price for transactions. The various indicators available on real estate portals suggest a slight increase in the time between a property going on sale and the date it is purchased. According to data from the Idealista portal, it took about six months to sell a house in Q3 2020, almost one month more than a year earlier.6
Consequently, in spite of the relatively moderate decline in house prices to date, we still predict a somewhat sharper correction in the latter part of 2020 and first half of 2021. The revival in economic activity expected from spring onwards should support a gradual recovery in house prices in the second half of 2021. However, the far-reaching economic crisis caused by COVID-19 will make this recovery very gradual, so we do not expect prices to return to their pre-crisis levels until 2024.
According to the indicators available on various real estate portals, rents have started to come down in most provinces and municipalities in Spain, albeit with a large number of differences across the different markets. One factor that is having a decisive effect on rents in certain areas is the substantial increase in the number of rented flats available, resulting from properties that had originally been intended for short-term tourist rents being transferred to the residential market. According to a study by Fotocasa, 64% of tourist apartment owners have switched to traditional renting.7 There has also been an increase in the average time it takes to rent a property out which, according to a study by Servihabitat,8 is now 58 days, almost 10 days more than one year ago although still far from the 64 days it used to take in 2017.
CaixaBank Research has developed new models for forecasting house prices at the level of province using large amounts of information (big data) and applying machine learning techniques. According to these models, house prices will fall in 7 out of 10 Spanish provinces in 2021 and grow only very moderately in the rest. Comparing current forecasts with those projected by the models before the pandemic, a notable correction can be seen in the expected growth of house prices in one year’s time, approximately 4 pp on average. This correction has been more pronounced in provinces with a higher urban concentration and greater dependence on foreign tourism, although they are still the most dynamic in spite of this.
In this article we examine the forecasts of house prices for 2021 at the level of province, obtained from the machine learning models of CaixaBank’s new real estate big data tool. The tool combines millions of internal CaixaBank data with reliable external sources of information. This enables the application of machine learning algorithms, which improve the forecasts as more information is available. The Ministry of Transport, Mobility and Urban Agenda’s historical series of house prices has been used to train the models, based on free housing appraisal prices. Most of these data come from appraisals of properties more than 5 years old, so the house price forecasts in this article largely reflect trends in the second-hand property market.
Expectations regarding the trend in Spanish house prices have altered extensively as a result of COVID-19. If we compare the distribution of house prices projected by the models one year ago (October 2019) with the most recent projections (October 2020), we can see a shift in the price distribution to the left. In other words, the models are currently projecting significantly lower house prices than those forecast a year ago.
Specifically, in October 2019 the models predicted that house prices would rise in one year’s time in almost all provinces, with an average increase of 3.5%. The highest rises were expected in the provinces of Valencia (+7.4%), Navarra (+6.5%), Zaragoza (+6.5%) and Madrid (+6.4%). And only four provinces were projected to see a decline: Ciudad Real (–1.4%), Zamora (–1.3%), Palencia (–0.8%) and Ávila (–0.3%).
while an increase was expected in 9 out of 10 provinces a year ago, today a decrease is expected in 7 out of 10.
In October 2020, the models forecast that, in one year’s time, house prices will have fallen in 7 out of 10 provinces. However, the models still project price increases in almost one third of Spain’s provinces, albeit a much more moderate rise than predicted a year ago, particularly in Malaga (+2.0%) and Madrid (+0.8%).
It is therefore evident that the downward adjustment of forecasts over the past year has been widespread and considerable. In particular, the house price growth forecast over a one-year horizon has been lowered by about 4 pp between October 2019 and October 2020.
The greatest adjustment in forecasts between October 2019 and October 2020 has been in the urban provinces.1 While, one year ago, the models predicted a 5% revaluation on average in house prices over a one-year horizon for the urban provinces, they now predict a slight fall in prices between Q3 2020 and Q3 2021 (–0.2% on average). In contrast, rural provinces have seen a significantly smaller adjustment in their house price projections (about 3 pp in the past year). However, as these real estate markets were already much less dynamic before the pandemic (one year ago, an average increase in house prices of 1.2% was projected for rural provinces), the change in expectations has led to notable decreases in house price forecasts for most rural areas (–2.0% on average between Q3 2020 and Q3 2021).
A similar pattern can be observed if we divide the provinces into two groups according to their degree of dependence on foreign tourism. Specifically, we consider a province to be dependent on foreign tourism if more than 10% of CaixaBank’s POS terminal transactions in the province in 2019 were carried out with foreign cards.2The result is that the house price forecast for tourism-dependent provinces has altered considerably in the past year: from an average one-year growth rate of 4.7% projected in October 2019 to the current forecast of –0.4%. On the other hand, less tourism-dependent provinces have seen a smaller adjustment in their house price forecasts over one year, although these are precisely the provinces with the largest fall in prices projected for the coming year.
whose forecasts have seen the greatest adjustment; nevertheless, they are still the most dynamic.
Barcelona province and the Community of Madrid concentrate a large part of real estate activity and it is therefore important to look at these in greater detail. The following chart shows the trend in house prices since 2005, together with the model’s forecasts made in October 2019 and October 2020. The correction is obvious, as summarised below:
Finally, it is also useful to look at the trend in the forecasts month by month as this reveals how the model learns and recalibrates its forecasts as new data become available. The following chart shows an initial shift in forecasts in March 2020 with the arrival of COVID-19 and a second shift in June 2020 with the incorporation of Q2 2020 data, indicating the first year-on-year fall in house prices (the target variable for our forecasting models).
These results show the great potential offered by models combining big data with machine learning to predict future trends in Spain’s real estate market. This information is particularly important in a situation such as the present, when high uncertainty regarding developments in the pandemic and its impact on the economy requires us to continually re-evaluate our forecast scenario in order to be able to make more informed and accurate decisions.
Europe’s economic response to the COVID-19 crisis took shape in July: the European Council approved the Recovery Plan for Europe, the so-called NGEU, via which the European Union will grant up to 750 billion euros to its member states to stimulate their economic recovery after the shock of the pandemic. This is an unprecedented agreement and it could have a considerable impact on Europe’s real estate sector since one of the EU’s main goals, to which this Recovery Plan aims to contribute significantly, is to reduce greenhouse gas emissions by 55% by 2030 compared with 1990 levels. It is clear that renovating Europe’s buildings, which are responsible for 40% of the continent’s energy consumption, will be key to achieving this climate target.
Between 2021 and 2026, the main component of the NGEU, the Recovery and Resilience Facility, will allocate up to 312.5 billion euros via grants and 360 billion in loans to member states, depending on their size and how severely they have been affected by the COVID-19 crisis. According to the European Commission’s own estimates, Spain and Italy may receive around 60 billion euros (4.8% and 3.7% of their GDP, respectively)1 from the Facility; France, approximately 30 billion (1.3% of GDP); Portugal, 13 billion (6.2% of GDP) and Germany around 20 billion (0.6% of GDP). To access these funds, EU countries must draw up National Recovery and Resilience Plans and specify both the investment projects they will finance with the funds and the reforms accompanying them. These projects and reforms should contribute to four general goals: i) Promote economic, social and territorial cohesion in the European Union, ii) Strengthen economic and social resilience, iii) Mitigate the social and economic impact of this crisis, and iv) Support ecological and digital transition. In addition, each recovery and resilience plan should also allocate a minimum of 37% of its expenditure to climate-related aspects.2
and could be an important means of renovating Europe’s buildings, a sine qua non for achieving the agreed emission targets.
The European Commission has identified the renovation of Europe’s buildings as one of its priorities for the ecological transition. More than 200 million buildings, representing 85% of Europe’s total, were built before 2001 and most of them are not energy efficient. The following chart shows that in many countries, especially Spain, there is still much work to be done to improve the average energy efficiency of housing. The current renovation rate is too slow to meet the target of reducing emissions by 55% by 2030. According to the Commission, around 90 billion euros per year of European private and public investment is required to achieve the target renovation rate.
In view of this situation, the European Commission recommends that renovating housing be one of the priorities of the national recovery and resilience plans. Such renovations could simultaneously help to achieve the two European goals of ecological transition and digitalisation of the economy, for instance through "smart" buildings that are more energy efficient and can even produce their own energy.
As a result, Germany, France and Spain have already announced a number of renovation projects which they hope to finance via European funding. In Germany, the government has stated that it would increase funding for its energy renovation programme for buildings from the initial 1.5 billion to 2.5 billion euros, and has also announced the creation of a new 2 billion euro programme to adapt municipal buildings applying climate-friendly criteria. France’s Plan de Relance includes 6.7 billion euros between 2021 and 2022 to renovate private housing, SME premises, public buildings and social housing.
The following article looks at how Spain will use these European funds to finance a drive to renovate its buildings.
The Recovery, Transformation and Resilience Plan (PRTR) for the Spanish economy could be an important catalyst for the real estate sector. With the help of European funds, the government plans to recondition half a million homes between 2021 and 2023, with the aim of improving their energy efficiency and thereby helping to achieve the agreed decarbonisation targets. The General State Budget (PGE) also proposes a notable increase in the funds allocated to increase the amount of rented social housing, a policy that is crucial as rents have become even less affordable for the most vulnerable members of the population.
The European Recovery Fund (Next Generation EU) represents a unique opportunity to modernise the Spanish economy and boost its growth potential. Spain will receive 72 billion euros in non-refundable transfers (grants) between 2021 and 2026, equivalent to 5.8% of its GDP in 2019.1 Although the first instalment from the European Commission is not expected until mid-2021,2 the government plans to advance funds to speed up investments and expects to spend over 26 billion euros in 2021, according to the preliminary proposal for the General State Budget. As we shall see, a significant proportion of these funds will be used to support the real estate sector’s ecological and digital transition.
In the area of housing, the Recovery, Transformation and Resilience Plan presented by the Spanish government to channel European NGEU3 funds focuses especially on the plan to renovate housing and urban regeneration. This policy is well aligned with the goals set by the Commission as renovating Europe’s buildings is one of its key priorities.4 The PRTR emphasises the importance of improving housing quality and boosting the construction industry both sustainably (by increasing energy efficiency, promoting green infrastructure and deploying solar roofs) and digitally (through smart applications in buildings). Specifically, the PRTR plans to recondition 500,000 homes between 2021 and 2023. This is an ambitious target which, if achieved, would be very positive for the sector as well as for the environment given the current state of housing, as we will see below.
will be allocated to renovating housing, tripling public investment in this area.
According to the Ministry of Territorial Policy, 4.5 billion euros of the NGEU (6.25% of all transfers) will be allocated to renovating housing over the next few years. In 2021, as stated in the PGE, around 1.65 billion euros will be channelled from the NGEU to finance housing and development policies. If this comes about, the amount alone would represent more than three times the housing items included in the country’s budgets on average over the past five years, ranging from 460 to 510 million euros per year. Furthermore, this amount represents 73% of the total allocation in the 2021 Budget for housing policies (2,253 million euros) and 6.2% of the aforementioned 26,634 million euros of the European NGEU funds that are expected to be paid out in 2021.
of which 1,651 million euros come from the European funds and will be used to recondition housing, while 569 million euros will be invested in social housing policies.
The 1.65 billion euros from the NGEU funds in 2021 will be used by three programmes: one to renovate residential environments (housing and neighbourhoods), managed mainly by the autonomous regions via agreements and totalling 1.55 billion euros; another focusing on the digital and sustainable reconditioning of public buildings, worth 81 million, and another programme with a budget of 20 million to renew the country’s architectural heritage. Consequently, although European funds will not directly finance social housing programmes, they will enable funds to be released and thereby increase the budget for this area in the 2021 General State Budget: the total allocation of 2,253 million euros for housing includes 569 million euros for social housing, 20% more than in previous budgets. This allocation will be used mainly to subsidise rent for vulnerable households and for the plan to provide 20,000 homes under the social rent scheme.
The PGE includes 500 million euros from the NGEU funds for the circular economy, which should help to improve the efficient use of resources as well as the competitiveness of various strategic sectors. However, details of whether some of this budget will be devoted specifically to the construction industry have not been disclosed.
The plan to renovate housing is a unique opportunity to promote the decarbonisation of the real estate sector but also to alleviate some of the problems faced by housing at present. Especially, in addition to the age of housing (50% of homes in Spain are 40 years old or more), there is also a great deal of variability regarding their characteristics and performance in terms of energy efficiency, habitability and access.
and much of it was built with little attention paid to energy efficiency
In some cases these differences are the result of the technical regulations in force at the time they were built. For example, and as the following chart shows, half of Spain’s housing was built before the first basic building regulations came into force in 1980. In other words, around 12.8 million homes were built according to standards that regulated the safety of the structure but did not consider issues related to thermal insulation or energy consumption.5 Likewise, an additional 44% of homes (some 11.4 million) were built between 1981 and 2007, before the First Technical Building Code came into force which established minimum requirements for safety, habitability and energy efficiency.6 The result is that Spanish homes are largely inefficient from an energy point of view and require a thorough renovation to meet the greenhouse gas reduction targets the country has undertaken to achieve.
Part of Spain’s housing also suffers from various problems related to its habitability and quality. One of these problems is the small size of some housing. Specifically, 13% of homes in Spain are less than 60 m2 in size, while 46% are between 61 m2 and 90 m2. Renovation aimed at improving the use of space (such as enclosing terraces) can be of great help in increasing the net surface area of such homes.
Another problem that affects some housing is its poor state of conservation. Specifically, nearly 1.8 million homes in Spain (7% of the total) are in a state of repair that can be classed as dilapidated, bad or deficient,7 placing Spain slightly below the EU average in relative terms: 15% of Spain’s population lives in a property with conservation problems compared with 13% in the EU.8
Architectural barriers and poor means of access, which affects 13.2% of the residential stock, are other major shortcomings of housing in Spain. About 3.4 million homes are in buildings of four storeys or more without a lift.
Partly due to the climate, the energy demand of Spain’s residential sector is lower than that of the EU, both in absolute9 and relative terms.10 This lower energy consumption necessarily results in a lower savings potential than in other European countries. This is an important aspect, since one of the arguments in favour of energy reconditioning is that future energy savings (especially in HVAC) can be higher than the cost of the investment/work carried out.11
If we look at how the energy consumed by Spanish households is used, most is for heating (see the chart below). However, Spain’s share of energy consumption is much lower than that of the EU: 42% in Spain compared with 64% in the EU.12
Lighting and household appliances also account for a large part of the energy consumed by households, but in this case the proportion of energy consumed is higher than in the EU: 14% in the EU compared with 32% in Spain. This is important, since households have more and more equipment and appliances, so these need to be increasingly energy efficient to avoid a parallel increase in electricity consumption.
As already mentioned, the Recovery, Transformation and Resilience Plan for the Spanish economy proposes to recondition 500,000 homes between 2021 and 2023. This provides a significant boost for the goals set out in the National Integrated Energy and Climate Plan (PNIEC 2021-2030),13 which includes the renovation of the thermal envelope (façades and roofs) of 1,200,000 homes by 2030, starting with 30,000 homes per year in 2021 and ending with 300,000 homes per year in 2030.14
but there are certain limitations that may hinder the rate proposed.
The European funds should therefore considerably help to speed up the rate at which Spanish housing is renovated. However, there are certain aspects that could hinder the plan’s complete implementation. Firstly, the ambition of the Recovery, Transformation and Resilience Plan contrasts with the current rate of housing renovation (close to 25,000 homes per year); in fact, achieving the target of 500,000 homes in three years entails multiplying the current rate of renovation by six by 2023.
Secondly, the investment to improve the energy efficiency of housing ranges from 5,000 to 10,000 euros for the building’s envelope and from 12,000 to 40,000 euros for complete projects,15 a high cost for many households. It will be crucial for renovation support to also reach the hardest hit and most vulnerable households, as well as zones with the greatest needs in terms of reconditioning.
Thirdly, in general the population is relatively unwilling to carry out building work. According to the Housing Barometer (CIS, 2018), 87% of those surveyed did not plan to carry out any improvements or reforms to their homes in the following year (most because they did not think their homes needed them). Moreover, among those who did plan to carry out work, decorative reforms (such as in the kitchen or bathroom) were clearly prioritised over those related to energy efficiency (such as replacing doors and windows).
We should also note the predominant type of housing in Spain, mostly multi-family buildings of three or more storeys, these accounting for 67% of the total housing. It tends to be more difficult to make decisions in communities of several owners and this can present an additional barrier to some of the work required being carried out.
And, finally, the extent of public concern or awareness regarding energy efficiency is relatively lower than other housing-related issues. According to the latest housing barometer (CIS, 2018), concern about thermal comfort (35%) is similar to other concerns such as noise and security against burglary, and lower than other issues such as the lack
of a lift in some buildings.
In short, the reconditioning of housing is key to reducing energy consumption and thereby greenhouse gas emissions. However, in order to encourage such building works, it is also important to convince people that renovating their dwelling is a great opportunity to improve the comfort and interior habitability of their homes (an issue that lockdown has made even more evident), as well as to increase the property’s value. It is therefore essential to direct the available public resources appropriately in order to address the main problems of Spain’s housing together with its citizens.
In addition to renovation, another priority for housing policy over the coming years is to increase the amount of public housing aimed at social or affordable rents. Spain is one of the European countries with the highest percentage of tenants who spend more than 40% of their income on rent, a sign of the extra effort many households have to make to meet their housing costs. This extra effort is also disproportionately high for low-income households and young people. Moreover, the coronavirus crisis has aggravated the existing problems of affordable rented accommodation, especially among the most vulnerable people, as pointed out by the International Monetary Fund (IMF) in its latest report on the Spanish economy.16 The IMF recommends increasing the number of homes allocated for social rented accommodation as Spain has one of the lowest figures in Europe: social housing accounts for 2.5% of the total number of primary residences in Spain compared with a European average of 9.3%, according to Eurostat data. To reach the European average, 1.2 million additional social housing units would be needed, a figure that would be difficult to achieve without public-private partnerships.
most of them intended for ownership, not rent. As a result, there is very little rented social housing, approximately 290,000 homes.
This lack of rented social housing is the result of housing policies that have historically been aimed at developing social housing via ownership. Between 1981 and 2019, almost 11 million homes were completed in Spain, 21.6% of which were social housing. During this same period, households grew by just under 8 million, so we can conclude that social housing has covered the accommodation needs of approximately 30% of Spanish households in the past four decades, a highly significant figure. However, most of the social housing built in Spain has been destined for ownership (see the chart below). Consequently, after a few years these properties have now acquired the status of free housing on the market, thereby losing their original social purpose.
Very little social housing has been developed since 2010, affecting rented accommodation to a greater extent. In fact, between 2013 and 2016 the development of this kind of property has been almost zero (368 homes per year on average), increasing the prevalence of social housing under ownership. However, since 2017 rental accommodation seems to have regained some of its relative weight. Specifically, 12,496 social homes were built in Spain in 2019, of which 2,585 (20.7%) were for rent. Nevertheless, these figures are clearly not enough to significantly increase the stock of rented social housing.
According to recent estimates by the Ministry of Transport, Mobility and Urban Agenda,17 Spain’s stock of publicly-owned social housing for rent totals about 290,000 homes. Of these, around 180,000 are owned by the autonomous region and 110,000 by the local council. These 290,000 rented social homes cover 1.6% of the 18.6 million households in Spain (data from the «Cuestionario sobre vivienda social», 2019).
The European funds represent a historic opportunity to recondition Spain’s old, poorly energy-efficient housing, renovations that will also contribute, simultaneously, to the two European goals of ecological transition and digitalisation of the economy, for instance through more energy-efficient «smart» buildings. Similarly, the strong economic and social impact of the COVID-19 crisis has highlighted the need to create a large amount of public housing available for rent in order to resolve the current shortage and be able to provide a housing solution for the most vulnerable in society. These policies should drive a green, social and digital recovery.
2020 was a tough year for the tourism industry. All the data that became available at year-end show that the impact of the pandemic on the sector has been devastating. After a total standstill during the months of March, April and May 2020, tourism demand failed to pick up appreciably during the rest of the year, even during the summer months when the infection rate seemed to be under control. Moreover, the waves of COVID-19 occurring at the end of 2020 and beginning of 2021, together with the various measures to restrict movement and businesses, have kept tourist numbers at a minimum, aggravating the losses suffered by the sector.
2020 was a tough year for the tourism industry. All the data that became available at year-end show that the impact of the pandemic on the sector has been devastating. After a total standstill during the months of March, April and May 2020, tourism demand failed to pick up appreciably during the rest of the year, even during the summer months when the infection rate seemed to be under control. Moreover, the waves of COVID-19 occurring at the end of 2020 and beginning of 2021, together with the various measures to restrict movement and businesses, have kept tourist numbers at a minimum, aggravating the losses suffered by the sector.
In this report we analyse in detail the impact of COVID-19 on three specific aspects of the tourism industry. First, we focus on the performance of the aviation sector, which is experiencing huge difficulties due to global border restrictions. We have also examined the price adjustments observed in the tourism industry, especially by the hotel sector, showing that the extensive price cuts carried out were relatively ineffective in boosting demand. Finally, we have also studied the performance of rural tourism in 2020, using big data methodology. In this case, rural tourism has provided some good news in the past year thanks to its more appealing features – social distance, tranquillity and nature – after the tough lockdown suffered in the second quarter of the year.
The outlook for 2021 is more optimistic. The great effectiveness of the vaccines and their roll-out over the past few months, albeit at very different rates across different countries, suggest that tourism in Europe could start to recover in the second half of the year. Nevertheless, this recovery is not without its risks, especially in the short term. After managing to contain the third COVID-19 wave in Spain, we are already seeing some neighbouring countries beginning to report a rise in the number of infections. It is important for the virus to be kept under control in Spain and, if possible, also in Europe to enable the sector to embark on its recovery as soon as possible, preventing losses from continuing throughout the spring and the start of the summer season.
The key rolling target for the sector's recovery is the vaccination of the population aged over 60, which we refer to as the population at risk. This group accounts for only 20% of the infections but for two thirds of hospitalisations and 95% of the deaths caused by the virus. We expect the vaccination rate to continue accelerating week by week and, by the end of May, almost 90% of the population at risk should have been immunised. This would significantly contain the pressure on hospitals and open up the possibility of easing restrictions on mobility.
In this scenario, we expect spending by international and domestic tourists in Spain to improve considerably compared with 2020, albeit still considerably below the 2019 level. We therefore predict tourism GDP will increase by around 80% in 2021; a good figure but still 40% below its pre-COVID level. In the medium term, vaccines should provide a definitive way out of the situation experienced by the sector, consolidating its recovery and its role as one of the driving forces for the Spanish economy.
2020 has now been left behind; a year that will be remembered in the tourism industry as the toughest in recent history. In 2021, the fight against the pandemic continues and restrictions on movement and trade are still preventing normal economic activity, hitting tourism-dependent businesses particularly hard. However, the roll-out of the vaccines will provide a turning point once immunity is achieved among the population most at risk. Our projections point to a strong recovery in the sector during the second half of the year, resulting in tourism GDP growing by 80% annually, once again becoming one of the driving forces for the Spanish economy.
2020 has been a tough year for the tourism industry. All the data that have become available at year-end show that the impact on the sector has been devastating. Moreover, this impact was not only due to the total standstill experienced during the toughest months of lockdown in Q2 2020 but also because, after the strictest limits on movement were withdrawn, tourism demand did not pick up appreciably for the rest of the year. In addition, the waves of COVID-19 occurring at the end of last year and the beginning of 2021 have dealt a hard blow to the sector, with demand remaining very weak up to the present.
Examining the 2020 figures provided by the National Statistics Institute, summarised in the charts below, it is clear that the tourism industry has suffered an unprecedented shock. Expenditure by international tourists for the year as a whole plunged to €20 billion, down 79% from €92 billion in 2019. Even during the best tourist months after the start of the pandemic, namely July and August, the falls in international tourist expenditure remained at around 80% year-on-year.
Data from hotel and non-hotel occupancy surveys reveal that tourist accommodation is one of branches in the industry that are suffering the most from the consequences of the pandemic.1 Total tourist overnight stays in hotel and non-hotel accommodation fell by 69% year-on-year, despite the better performance of domestic demand in relative terms. The hotel occupancy rate remained very low for the year as a whole (with an annual average of 26%), dragging hotel revenue per available room down by 68% annually.
One of the few positive notes in the 2020 figures is that domestic demand has proved to be a powerful support for the industry when movement restrictions are eased. Nevertheless, domestic tourist expenditure has also fallen sharply, especially since last October when the autonomous regions began to restrict movement to within their borders, limiting almost all domestic tourism. According to our estimates, domestic tourist expenditure fell by 45% in 2020, considerably less than international tourism. Domestic demand, which traditionally accounts for a quarter of the total, therefore generated 64% of the overnight stays after the outbreak of COVID-19. It is also worth noting that, during August when movement was not so restricted, spending by domestic tourists only fell by 13% year-on-year. This paints a relatively positive picture for the second half of 2021, by which time the population at risk should have been vaccinated and restrictions on movement will begin to be withdrawn.
considerably less than for international tourism. After the outbreak of COVID-19, domestic demand went from generating a quarter to 64% of all overnight stays.
At present, the state of the tourism industry is extremely volatile. For this reason, it is of vital importance to have an analysis of the situation that is as up-to-date as possible, in spite of the delay in publishing official statistics. To this end, we carry out a real-time analysis, using big data methodology, of the card payments made via CaixaBank's point-of-sale (POS) terminals.
According to our indicator, the beginning of the year has been severely affected by the third COVID-19 wave in January and part of February and the tightening of restrictions to combat this. More recently, the data point to an incipient upswing in the turnover of some tourism businesses following the easing of restrictions on hospitality in many autonomous regions. As suggested by CaixaBank's POS card expenditure data for the first half of March, the POS turnover of tourism-dependent retailers was still 52% below the level recorded during the same period in 2019. In this respect, it is worth noting the continuing sharp drop in POS turnover for accommodation and travel agencies, down by 83% and 91%, respectively. On the other hand, restaurant business POS terminal expenditure, which has suffered considerably from measures to contain the second and third waves of COVID-19, has picked up notably in recent weeks, going from drops of 40% at the end of January compared to the same period in 2019 to a fall of «just» 12%.2
The improvement in the conditions observed for the food and drink industry, mainly in restaurants and bars, has led many businesses in this branch to reopen their doors in recent weeks, something that could be very important to recoup the jobs lost. To track inactivity in real time, we have calculated the proportion of businesses that have gone from recording payments via their CaixaBank POS terminals in 2019 to recording no activity in 2020 and 2021.3 As can be seen in the chart, according to this indicator the proportion of inactive bars and restaurants during the second week of March 2021 stood at 7%, 10 pp lower than at the end of January 2021. For its part, tourist accommodation reported 33% of inactive businesses, a very high level although significantly better than the situation observed at the end of January.
% of total
Looking ahead to the coming months, the outlook is not positive. If we analyse Google searches for trips to Spain carried out in our main source markets, we can see that interest is still low and, therefore, the prospects for foreign arrivals in the short term are moderate. As can be seen in the chart, according to our analysis searches by international tourists were 53% below the benchmark level. However, tourism will depend on how the pandemic evolves and it is to be expected that, once we are able to ease restrictions on international travel, interest will pick up rapidly. Consequently, the experience after the coordinated withdrawal of EU border restrictions in June 2020, when the interest of tourists in travelling to Spain went from 60% below the benchmark to just 5%, revealed that European tourists still want to travel in spite of the restrictions and, in 2021, if these restrictions are eased, the interest in travelling to Spain will pick up. Of particular note is the sharp rise in Google searches in mid-March 2020, the result of internet users' interest in the border restrictions introduced as a result of the first state of emergency.
revealed that European tourists are still keen to travel in spite of everything. If these restrictions are eased in 2021, interest in travelling to Spain should recover.
It is vitally important to prevent a fourth wave of infections. Otherwise, the sector could once again suffer a situation similar to that experienced at the beginning of the year, when turnover fell by around 70% for several weeks. At the time of going to press, the situation in the main European countries remains very delicate and there has been another spike in the number of daily infections, indicating there is still a high risk of outbreaks in Europe.4
The rapid distribution and administration of vaccines is a key factor for the recovery to begin in the tourism sector and the economy as a whole. According to the European Commission's target reflected in Europe's vaccination plan, 80% of health workers and the population aged over 80 should have been vaccinated by the end of March, while the target of vaccinating 70% of the adult population, which should bring about herd immunity, has been set for the end of September.5
Although there have been delays in distributing the vaccines, the September target is likely to be met. In March, the average vaccination rate for the Spanish population was around 1.1 million doses per week. As can be seen in the table, this rate needs to be speeded up by at least 40%, up to 1.5 million doses per week, in order to achieve the target of herd immunity by the end of the summer. While this is a significant increase, it is nevertheless feasible considering the following: in the last month, Spain's vaccination rate has already risen by 45%, the safety of the AstraZeneca vaccine has been confirmed and the first supplies of the Janssen/J&J vaccine arrived in April.
is a key factor for the recovery to begin in the tourism sector and the economy as a whole.
In the short term, the key for the tourism sector is to immunise the over-60s before the summer. This group accounts for just 20% of the infections but two-thirds of the severe cases of COVID-19 and nearly 95% of the deaths. Increasing the vaccination rate to 1.5 million doses per week would achieve immunity for 90% of the population at risk by May. Once this milestone has been reached, the pressure on hospitals would noticeably ease and COVID-19 containment measures could be relaxed, helping to substantially improve the movement of both domestic and international tourists.
Millions of weekly doses
Given that this first milestone looks likely to be reached, CaixaBank Research expects tourism expenditure to recover strongly as from the second half of the year. Specifically, our scenario is based on the hypothesis that the restrictions on movement and business will start to ease considerably from May onwards, when a significant part of the population at risk will finally be immunised, and that a further move towards normalising the situation will be possible in September, once herd immunity is achieved. Similarly, the introduction of the health passport from June, as proposed by the European Commission, will make it easier and encourage people to travel during the summer season.6 Also, the rapid (albeit brief) improvement in tourist flows during the months of July and August in 2020, when movement was permitted but social distancing measures were still in place, suggests that tourism will recover strongly once restrictions on movement in Europe are eased.7
Based on these three assumptions, and acknowledging there is still a great deal of uncertainty surrounding our scenario, we expect international tourism expenditure in 2021 to increase 2.3 times compared with the 2020 levels, leaving it 45% below the 2019 levels. As for domestic tourist expenditure, we expect this to grow by 30% year-on-year, 25% below the 2019 figure (–45% in 2020). As far as the summer season is concerned, the outlook is relatively positive: we expect international expenditure to limit its decline compared with summer 2019 to 27% while, in the case of domestic tourism, the drop is expected to be 16%.
Change compared with the same quarter in 2019
As a result of these spending figures, we expect tourism GDP to be about 40% below its pre-COVID level in 2019, a recovery of 80% compared with 2020.8 This recovery would directly contribute 1.9 pp to the growth of Spain's economy. Although there is still a lot of uncertainty regarding 2022, the progress being made by the vaccination roll-out invites us to remain positive. We therefore believe that the population's herd immunity will help normalise the movement of tourists in Spain and Europe. In this case, the sector would regain a level of activity that is still below but closer to those of 2019, in any case enough to ensure the profitability of the businesses that make up the tourism industry.
in digitalisation, sustainability and infrastructures, investments which are currently difficult to undertake for such a hard-hit tourism industry.
Although the sector's long-term sustainability is beyond doubt, the role played by the government will be crucial during the period of gradual recovery that still lies ahead. It is therefore important to highlight the importance of economic policy in 2021 as a whole, which must continue to adapt rapidly and effectively. In this respect, we believe the furlough scheme should be extended until the recovery consolidates. It will also be important to take advantage of the flexibility provided by the extension of ICO bonds and their grace periods. Moreover, the direct aid received by the sector will be very useful to ensure the survival of businesses that will become profitable once people can travel again. Consequently, the 7 billion euro package launched by the central government and the funds available to boost solvency (the 10 billion managed by SEPI plus the 4 billion accompanying direct aid in the last package) are a move in the right direction. Finally, the Next Generation EU (NGEU) funds will also be important when it comes to supporting improvements in digitalisation, sustainability and infrastructures, investments which are currently difficult for such a hard-hit tourism industry to undertake but vital in order to survive this crisis whilst maintaining our status as the most competitive tourist destination in the world.
Rural destinations have emerged as the most attractive choice after the outbreak of the pandemic. Rural areas were a great alternative in the summer for those tourists wanting to travel whilst still maintaining a social distance. As a result, the loss of tourism business in the less urban regions of Spain has been much lower than in more traditional coastal destinations and cities. This article has applied big data techniques to analyse the trends in card payments made by both domestic and international tourists according to the characteristics of the destinations they visited. The results confirm the increased resilience of rural tourism destinations in 2020, suggesting a positive outlook for rural tourism in 2021.
Rural tourism has emerged as one of the alternatives for both domestic and international tourists during 2020. During the summer months, those regions with a relatively large share of rural tourism, such as Asturias, Cantabria and Navarra, recorded a smaller decline in the number of overnight stays by domestic tourists, while the region that suffered the most was the Community of Madrid, Spain's main urban destination along with Barcelona. In fact, overnight stays in rural tourist accommodation barely decreased in the months of July and August, specifically by 12% year-on-year, while total tourist accommodation recorded a drop of 60% year-on-year.
However, the overnight stay data provided by the National Statistics Institute only allows us to analyse tourist movements and we cannot assess the likely changes in tourist consumption habits in 2020. For a broader analysis, we have used data on card payments and cash withdrawals via CaixaBank POS terminals and ATMs. Specifically, we have focused on the payments made with tourists' cards, eliminating all spending by local consumers from the sample.1 We have also classified all the municipalities in Spain as urban, rural or coastal2 in order to analyse the tourist expenditure in the different types of destinations.
methodology to analyse the data from card payments made by tourists in rural destinations.
According to this analysis, rural tourism accounted for about 10% of total tourism expenditure in 2019, of which only 3 pp was due to spending by international tourists. In 2020, on the other hand, the better performance of rural tourism compared with the rest of the sector increased this share to 14%. This is an appreciable portion of total expenditure, in line with the percentage of the population residing in rural municipalities, which is also 14%. As can be seen in the chart, tourism in coastal municipalities, which could be classified as the most traditional destinations for the tourism industry, accounted for 58% of total expenditure in 2020. In addition to being the most important, this was also the type of destination that attracted the highest proportion of foreigners last year, with 55% of expenditure in coastal destinations made via foreign cards. Finally, urban destinations accounted for 28% of total tourist expenditure in 2020.
% of total tourist expenditure
In 2020 rural tourism performed better than the rest of the sector, increasing its share to 14%.
If we look at the trends in tourist expenditure in 2020, spending by all tourists (domestic and international) identified via their card payments and cash withdrawals at CaixaBank POS terminals and ATMs fell by 51% in 2020.3 By type of destination, tourist spending fell by 46% annually in cities and by 56% in coastal destinations. In contrast, tourism expenditure in rural destinations fell considerably less (31% year on year) thanks to a much faster recovery in the period when the lockdown restrictions were eased and also because it remained more attractive in terms of social distancing during the months of the summer and early autumn.
As can be seen in the chart, in January this year, the latest month for which we have a detailed breakdown at the time of going to press, the decrease in tourist expenditure was very similar across all destination types: between 51% and 58% year-on-year. This is due to the fact that restrictions on movements have affected the autonomous regions to a similar extent during the second and third waves, in many cases prohibiting travel between regions (and even within the same region), thereby preventing tourists from crossing regional borders.
The greater resilience shown by rural destinations during 2020 was not enough to cushion the huge impact of COVID-19 on Spain's tourism sector, due to their small share within the tourism industry overall and because tourist numbers also declined appreciably for rural destinations. Nevertheless, this has played a very important role in terms of the geographical scope of the impact. Although rural tourism accounted for 14% of the total in 2020, 15 Spanish provinces recorded more than 40% of their tourism expenditure in rural municipalities. In these provinces that are more dependent on rural tourism, total expenditure fell by 33% annually, 17 pp less than the average for Spain. In comparison, the predominantly urban and coastal regions have been harder hit by the COVID-19 pandemic. In the 9 provinces with less than 5% of rural tourism, tourist expenditure fell by 60% (9 pp more than the average for Spain).
In these provinces that are more dependent on rural tourism, total expenditure fell by 33% annually, 17 pp less than the average for Spain.
Tourism expenditure in non-urban municipalities as a percentage of total tourism expenditure
If we look at the trends in tourist expenditure by type of destination and business, we can see that all types of businesses located in rural municipalities recorded smaller decreases in turnover from international and domestic tourists. Firstly, the tourist accommodation establishments (hotels and non-hotels) located in rural municipalities were much less affected by the crisis in 2020. As shown in the table, rural tourism expenditure fell by 44% annually while the decrease was 76% and 79% for urban and coastal destinations, respectively. A similar situation can be seen in spending on food and drink, one of the sectors that has been hardest hit by the consequences of COVID-19 in major tourist destinations, with tourist expenditure falling by more than 55% annually in urban and coastal destinations but falling by 27% in rural destinations. However, it is worth noting that the decrease in tourist expenditure in rural destinations was also considerable, albeit not as severe as in the rest of the destinations.
we can see that all types of businesses located in rural municipalities have recorded smaller decreases
Air passenger transport is one of the mainstays of the tourism sector's value chain. For this reason, and in a similar way to the rest of the sector, it experienced a huge slump in 2020 in the wake of COVID-19. Airlines are currently having to tackle a combination of high capital costs due to their large structures and an almost total lack of operating income. The evident need for liquidity among Europe's airlines has led some governments to inject public capital to prevent their collapse. However, 2021 looks like being the watershed the tourism sector needs: the progress made by the vaccination roll-outs and the approval of measures such as the health passport will be crucial for air passenger transport to embark on the road to recovery and return to being one of the mainstays of tourism.
Spain's excellent performance in terms of its international tourism in recent years would not have been possible without the work of the airlines, which have managed to increase connectivity between destinations at highly competitive prices. So much so that tourist expenditure on passenger transport, with air travel making up the largest share by far, accounts for a sizeable 11.2% of all tourist expenditure, as can be seen in the chart. Given the importance of air travel for tourism, it is not surprising that, in the current crisis in the sector, airlines lie at the epicentre of the economic impact caused by the measures implemented to combat the spread of COVID-19 around the world.
% of tourist consumption
The current situation of airlines is devastating all over the world. By February 2021, 16% of all countries had closed their borders while 65% had imposed selective entry restrictions or quarantine measures on arrival.1 This, combined with the huge share repre-sented by international connections in the industry, has meant that, according to data from the Official Airline Guide (OAG), the number of scheduled flights worldwide in January 2021 was almost 50% lower than in January 2020. By region, we can see that EU countries and particularly the United Kingdom are the worst performers, with year-on-year falls in January of 66% and 83%, respectively. The US market, also hard hit by COVID-19, fell by 44% in January, still very high but much less than the decline recorded by European countries, thanks to the support offered by its domestic market. Countries such as Japan, Korea and Australia are in an intermediate situation. In their case, the volume of domestic flights has recovered relatively better but international flights have slumped significantly as these countries have controlled the spread of the pandemic by implementing very tough border restrictions. China is a case apart, with a very large domestic air transport market and where, thanks to its low COVID-19 infection rate, its air traffic has managed to recover almost entirely.
in air passenger transport have been posted in the EU and UK.
Year-on-year change (%)
The decreases are extensive and very similar within the European market. According to data from EUROCONTROL, responsible for coordinating the continent's national air traffic control agencies, last January all Western European countries suffered year-on-year falls of between 55% and 80% in the volume of commercial flights. As can be seen in the chart, the five main European markets (Spain, Italy, Germany, France and the United Kingdom) recorded a volume of daily flights at the end of January that was very similar to the end of June. This is a remarkable development, since none of these countries had opened their borders before 15 June.
Such poor figures have placed the airline industry in a highly complex financial situation. Airlines tend to be very capital-intensive, heavily structured companies with high costs that find it difficult to adjust in the short term. The airline market is also extremely competitive. For this reason, margins are small and airlines need to maintain a large customer base and high aircraft occupancy rates to make a profit. According to estimates by the International Air Transport Association (IATA), industry revenue declined by 66% by 2020 due to an 80% drop in passenger revenue and despite freight revenue growing by 17% year-on-year. On the other hand, operating costs (fuel consumption, logistics, maintenance and salaries) fell by 43% due to the decline in the number of operations and various furlough schemes implemented. Losses have been widespread, with the profit margin on global sales going from 11% in 2019 to -45% in 2020.2
due to very low revenues and the difficulty of adjusting its high fixed costs.
Under such conditions, the industry has had to resort to extraordinary measures to increase its liquidity and raise capital. According to IATA data from the balance sheets of its nearly 290 member airlines, industry borrowing increased by 51.4% in 2020 via bond issues and bank and public sector loans.3 In terms of the part played by governments in supporting the sustainability of airlines, notable cases in Europe have been Air France-KLM, receiving €11 billion in credit and guaranteed loans from the French and Dutch governments at the end of April, and Lufthansa, receiving a capital injection of €9 billion from the German government in May 2020, increasing its stake in the company to 25%. In Spain we have also seen the bail-out of Globalia, the parent company of Air Europa, through two loans convertible into equity totalling 475 million euros, granted by SEPI at the end of October.
This situation has also been reflected in airline share prices. As the chart shows, the market capitalisation of Europe's major airlines declined by more than 50% between March and November, although share prices rallied slightly once a vaccine was announced. Only Ryanair has a higher capitalisation than on 1 January 2020.
Change compared with 1 January 2020
The case of Spain's airline industry is not unique. As in the rest of Europe, after the pandemic started in March 2020, passenger air travel came to an abrupt halt. According to data from the Ministry of Transport, Mobility and Urban Agenda, the volume of passengers at Spanish airports went from 274 million in 2019 to just 73 million in 2020 (–73% annually), dropping to levels similar to those in 1990. Moreover, the most recent figures show no improvement: in January 2021 the number of passengers in Spain fell by 85% year-on-year.
If we look at the trends for Spain's main airports, as shown in the chart, three conclusions can be drawn: (i) the slump in activity is widespread throughout Spain, (ii) those destinations preferred by domestic tourists have fared relatively better, and (iii) the Canary Islands have been more successful than the Balearic Islands in attracting domestic demand. Madrid, Spain's main airport thanks to its role as a hub between international and domestic flights, recorded a drop of more than 65% year-on-year in the second half of 2020. For their part the airports of Barcelona and Alicante, both located in very popular destinations for international tourism, have seen the sharpest decline in the last quarter of 2020. On the other hand, airports such as Seville and Bilbao, with a larger share of domestic flights, have also posted large decreases, albeit more moderate.
in 2019 to just 73 million in 2020 (–73%), dropping to levels similar to those in 1990.
The collapse of tourism in Spain in the wake of COVID-19 has pushed the tourism industry to undertake major price adjustments and the hotel sector has been the greatest exponent of this trend. According to data from the National Statistics Institute, the price per room per day charged by hotels in the summer of 2020 was 16% lower than the previous year. However, this huge price cut does not seem to have played a decisive role in reviving demand in some regions. The change in travel preferences brought about by the pandemic has meant that tourists have opted for nearby, familiar and less congested destinations, focusing less on price and thereby limiting the success of big reductions in hotel prices.
The law of supply and demand is very clear: if demand decreases and supply remains the same, prices fall; if supply falls and demand stays the same, prices go up. But 2020 was a year in which both these movements took place. On the one hand, tourist demand fell sharply, even during the summer months when movement restrictions and infection rates were very low. On the other hand, severe restrictions were imposed on hotel capacity, which considerably limited the number of tourist places available in hotels and the number of customers that could be served in restaurants.
According to economic theory, the reduced capacity experienced during the second half of 2020 should have limited price reductions in many establishments. However, the slump in tourist demand was so severe that most businesses and shops that depend to some extent on tourism lowered their prices in the hope of reviving demand.1
was so severe that most tourism-dependent busi-nesses and shops opted to lower their prices in the hope of reviving demand.
According to data from the consumer price index (CPI), the largest price cuts after the March-June lockdown in 2020 occurred in the rates charged for tourist accommodation, highly dependent on demand from international tourists. During the second half of 2020, the prices for this type of business fell by an average of 18% year-on-year. Big cuts were also observed in the price of international and domestic flights, with year-on-year decreases of 14% and 3%, respectively, something quite remarkable in a sector where margins were already very tight before the pandemic.2 However, it should be noted that not all tourism-dependent businesses lowered their prices. This was the case for food and drink establishments which, in spite of suffering from a drop in turnover, were able to replace some of their tourist clientele with local customers, on average pricing their goods and services 1% above 2019 levels.
The big reductions in tourist accommodation prices were not homogeneous throughout Spain as a result of the diversity within the tourism industry itself. Some of the factors that explain the different impact in different areas are the composition of tourism demand, changes in tourist preferences after the outbreak of the pandemic and notable differences in pre-COVID prices between regions. As can be seen in the chart, there are clear differences in hotel prices between autonomous regions. One of the main determining factors for these differences is the relative share of international demand, tourists who traditionally have more purchasing power, compared with the share of domestic tourism demand, who tend to prefer more moderately priced destinations. Accordingly, in the Balearic Islands, an eminently international destination, the average daily rate (ADR) for a hotel room was 123 euros during the summer months, while the Principality of Asturias, a destination whose tourism is much more focused on domestic visitors, had an ADR of 70 euros, more than 40% lower than the Balearic Islands.3 It is therefore to be expected that those autonomous regions with the highest prices, also the most urban and international, should be the ones undertaking the largest price adjustments.
Consequently, the autonomous regions that cut their prices the most during the summer months of 2020 were Madrid (–34.8% year-on-year), the Basque Country (–24.0%) and Catalonia (–20.2%), where Spain's main urban destinations are located. On the other hand, the Balearic Islands (–5.1%) and Canary Islands (–3.4%), two destinations that have been harder hit due to their dependence on foreign tourism, did not opt for such an aggressive strategy. Finally, in Asturias (+6.0%), Extremadura (+1.2%) and Aragon (+0.8%), three autonomous regions with a larger relative share of coastal and (less crowded) inland rural tourism that are traditionally more dependent on domestic tourism, did not choose to reduce their prices, taking advantage of their competitive edge in terms of social distancing.
Year-on-year change in ADR
During the past decade, the growing demand for tourism in Spain has pushed up prices in the sector year after year. Despite this, Spain has remained competitive compared with other international destinations as its tourism industry has improved the quality of its services and has taken maximum advantage of the country’s appeal (in terms of culture, climate, hours of sunshine, etc.). This situation was completely reversed in 2020. The absence of tourists took the pressure of demand off prices and pushed suppliers to make large adjustments in order to become more attractive and stimulate consumption.
tourism demand did not respond to price adjustments during 2020.
One of the questions that arises after seeing these large price cuts is whether it was an appropriate strategy which attracted a larger share of the tourists travelling through Spain. On paper, such a strategy was logical given the drop in demand. However, the situation in 2020 was so unique that it raises the issue of whether tourists’ decisions were really mostly price-driven. One highly plausible hypothesis is that the few international tourists who came to Spain and did not have a second home in the country (i.e. who stayed at hotels, tourist apartments, campsites, etc.) were loyal consumers who choose the same destination year after year in Spain. As for domestic tourists, it is likely that relatives and nearby destinations also prevailed. If so, the relationship between demand and price was not so strong in 2020, reducing the effectiveness of price cuts.
To test this hypothesis, we have performed a series of quantitative exercises to estimate the price sensitivity of demand in the different channels. First, we calculated the correlation between the annual changes in ADR and the market shares of international and domestic tourists in the autonomous regions. The result is an almost zero correlation, suggesting that hotel price reductions did not manage to improve the percentage of tourists received by each region in 2020. After carrying out a more sophisticated analysis to estimate the price elasticity of demand, the results point in the same direction. As can be seen in the chart, according to our estimates hotel demand was highly inelastic in 2020 and did not respond significantly to the price changes carried out by a large number of hotel establishments. In contrast, we estimate that hotel demand was elastic between 2010 and 2019, with a price elasticity of 1.3, implying that a 1% reduction in hotel prices would result in an increase in tourist overnight stays of 1.3%.4 This shows that special offers and price cuts were clearly attractive before the outbreak of the pandemic. However, estimates suggest that, in 2020, the price cuts carried out in some regions did not significantly attract a larger proportion of the low tourism demand.
The retail sector plays a very important role in an eminently service-based economy such as Spain’s, with a larger share compared to other European economies in terms of activity, jobs and number of firms. It is an atomised sector with a considerable number of SMEs and micro-SMEs and is particularly labour-intensive. Moreover, its presence is widespread throughout the length and breadth of our country. All this gives it a certain cohesive role, both from a social and territorial point of view, within the Spanish economy.
Retail accounts for 4.2% of GVA,1 making it an extremely important sector for the Spanish economy and one that has been growing strongly in recent years (+3.2% per year on average between 2014 and 2018). Moreover, its importance is slightly greater than in other European economies with a similar economic structure (3.9% in Germany and France and 3.5% in Italy) and also compared to the EU average (3.9%).
This is a particularly labour-intensive sector: in Spain it employed 1.7 million people in 2018; i.e. 9% of the total number of employees, more than double its contribution to GVA. Once again, the proportion of people employed in retail out of the total number of employees in the country is higher than that of the region’s major economies (between 8.7% and 8.1% in the case of Germany, France and Italy) and is also above the EU average (8.4%). It is also a sector that generates opportunities for female entrepreneurship: more than 50% of the firms incorporated in the sector are led by women.
However, its job opportunities have gradually decreased in recent years, due to the progressive penetration of e-commerce and the lasting effects of the recession; since 2008, retail has accounted for 5% of the jobs lost in Spain, twice as many as the economy as a whole over the same period.
Spain’s retail trade is an atomised sector. It was made up of almost 436,000 firms at the end of 2020, around 13% of the Spanish business fabric. Each company in the sector has 1.3 establishments on average, representing just over 550,300 establishments. These figures have been falling steadily in recent years: since 2010, the number of retail firms has fallen cumulatively by 14% and the number of establishments by 11%. This suggests that the financial crisis of 2008 caused more business concentration in the sector than the closure or disappearance of physical premises.
In this respect, the sector’s size in terms of companies is moving towards the European average (around 14% of Europe’s business fabric) and the most similar countries to Spain (13% in Germany, 15% in France and 16% in Italy). The annual data available for 2020 do not show any particular destruction of Spain’s retail business. despite the impact of the health crisis due to COVID-19. There is no doubt that the aid put in place to alleviate the impact of the mobility restrictions (in the form of guaranteed lines of credit, rebates on tax and the rental of premises, as well as furlough measures) have helped to minimise the drain on a sector hit hard by the restrictions (especially the subsectors of textiles and fashion and hospitality).
It should be noted that Spanish retail is dominated by food, beverage and tobacco establishments (21% of the total companies in the sector), followed by household goods stores (15%, including clothing, furniture and electrical goods, among others) and finally by non-specialist establishments (12%).
It was made up of almost 436,000 firms at the end of 2020, around 13% of the Spanish business fabric
In terms of the number of employees, the retail sector’s business fabric is essentially made up of companies without salaried workers and micro-SMEs. According to the annual Company Structure Statistics produced by Spain’s National Statistics Institute, half the firms in the sector do not employ salaried staff; while 48% of the total have a workforce of between 1 and 10 people on their payroll. However, it should be noted that, in terms of turnover, the large companies in the sector (250 employees or more) account for the biggest share of turnover in the retail sector as a whole (35% of the total). In recent years, with the number of companies progressively falling, the largest drops have been concentrated among companies with fewer than 20 workers, while the number of firms with more than 1,000 workers has increased by 10% since 2008.
while Madrid accounts for most of the sector’s national turnover (26%) and Catalonia has the largest number of employees (18% of the total).
The retail sector is very much present throughout Spain. A regional comparison shows that three autonomous regions stand out from the rest: Andalusia, Catalonia and Madrid. Andalusia is the region with the largest number of establishments (18% of the total), while Madrid accounts for most of the sector’s national turnover (26%) and Catalonia has the largest number of employees (18% of the total).
However, the situation changes significantly if we take into account the sector’s relevance in each region, measured by the share of retail firms in each area’s business fabric. It can be seen that the presence of retail trade across regions is relatively homogeneous, so it could be said that it is widespread throughout the country. In this case, the sector is relatively more important in Extremadura (18% of its business fabric), Andalusia (17%) and Castilla-La Mancha (16%), as well as Ceuta and Melilla (over 25%). On the other hand, Madrid (9.6% of the region’s business fabric), the Balearic Islands (11%) and Catalonia (11.3%) would be the regions where retail is less relevant as a business.
Due to the pandemic, the current situation of the Spanish economy is very complex. The case of retail is no exception, although it is proving to be remarkably resilient in the face of all the restrictions on opening hours and capacity adopted in order to curb the pandemic. As revealed by the sector’s demand and employment indicators, retail trade is now close to, but below, its pre-COVID level. Despite this, an analysis of CaixaBank’s internal data shows very different figures for large and small companies, as well as for the different branches of activity, confirming that the sector has yet to recover completely.