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 88% of its 2019 level, an annual growth of 63%. 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.
The outbreak of the pandemic in early 2020 has had unprecedented repercussions in many areas of the economy. One of these has been household consumption, the main component of GDP and traditionally considered an indicator of the health of the economy and the well-being of society. Because of the restrictions on business and mobility during the health crisis caused by COVID-19, the drop in consumption was much greater than during previous crises. The positive side is that once restrictions were lifted, Spain’s consumption has rebounded more sharply in 2021 than in the past. In fact, in October the consumption tracker produced by CaixaBank Research using internal data was already 13% higher than in the same month of 2019.
This trend should continue, albeit more moderately, during 2022 and 2023 (we predict consumption growth of 5.7% and 3.6% in 2022 and 2023, respectively). These forecasts are based on the assumption that, thanks to the vaccination campaign, there will be no need to impose restrictions on business and mobility as severe as those in place until last spring. While factors have emerged that will take the shine off this recovery, such as rising energy prices and bottlenecks in global supply chains, as these subside in 2022 we believe that demand pent up during the pandemic, a recovering labour market, improving consumer confidence, accommodative financial conditions and the boost from the Next Generation EU funds will continue to support the recovery in consumption.
In this report we focus on one of the most important underlying factors: pent-up demand. The impossibility of consuming a large number of services during the restrictions in 2020 and the consequent generation of forced savings (we estimate around €46.6 billion, 3.7% of 2019’s GDP) are boosting consumption now that businesses have reopened, supported by the fact that consumers perceive the crisis has been temporary (thanks to the vaccination campaign) and therefore see no need to keep a high level of savings for precautionary reasons. With the help of CaixaBank’s internal and completely anonymised data on more than 10 million clients, we have exhaustively analysed both the demand that has already materialised as well as its potential, according to the profile of each consumer.
Our results suggest that forced savings during the pandemic have been substantial but also very heterogeneous: the distribution of excess savings across low, medium and high-income groups was 4%, 58% and 38%, respectively. We have also found that these savings are mostly concentrated among people aged over 60. According to our analysis, accumulated savings are already being released in 2021 (specifically, low-income groups will use up 100% of their savings while this figure will be 67% and 36% for medium and high-income groups respectively), particularly benefitting the tourism, leisure and catering sectors.
We have also used this report to look at more structural issues regarding consumption patterns, using our internal data. Due to changes in consumption patterns, in 2020 the inflation faced by the average consumer was 0.1% according to our internal data (in contrast to the official figure of –0.3%), even higher for people over 60 and low-income groups. Finally, we have found that consumers generally spend more during the first week of the month and this pattern is especially pronounced among low-income groups and young people. In contrast, people over 60 and those on higher incomes tend to spend more evenly throughout the period.
Consumption in Spain is recovering faster than in previous crises. This is highlighted in the consumption tracker produced by CaixaBank Research based on internal data (available in Spanish: Monitor de Consumo). In the month of October, our consumption indicator was already 13% higher than in the same month in 2019.
Albeit at a more moderate pace, we expect consumption growth to remain dynamic over the coming years, supported by several factors including the release of demand pent up during the pandemic, the recovery of the labour market, improved consumer confidence, accommodative financial conditions and the boost from the Next Generation EU funds. Although some factors have emerged that will take some of the shine off the recovery, such as the energy crisis and tensions in global supply chains, we expect the rate of growth in consumption to remain strong over the next two years, with an increase of 5.7% in 2022 and 3.6% in 2023.
The slump in consumption during the COVID-19 health crisis was far greater than during the financial and sovereign debt crisis of 2008-2014. This is largely because the factors that depressed consumption in these two recessionary periods are very different. During the 2008-2014 crises, the main determinants were the fall in gross disposable income and, to a lesser extent, the increase in uncertainty associated with the future economic situation.1 In contrast, during the 2020 crisis the main determining factors have been restrictions on business and mobility (see the chart below).2
The lifting of most of the restrictions in Q2 2021 paved the way for a recovery in consumption,3 especially in those sectors hardest hit by the restrictions (leisure, catering and tourism), as reflected by our consumption tracker. Likewise, in 2021 this recovery has been supported by the release of the pent-up demand that accumulated during the toughest months of the pandemic, as well as by the notable improvement in both the labour market and consumer confidence, factors that will continue to drive consumption in 2022 and 2023.
Over the coming quarters, pent-up demand will play a particularly important role among high-income groups, which are the ones that generated the most excess savings during 20204 and, according to our estimates, still have the largest cushion to maintain a relatively high rate of consumption growth by their standards. Specifically, we estimate that, in 2021, they have spent less than half the excess savings they accumulated on consumption,5 so there is room for their consumption to continue to grow significantly in 2022.6
As for the labour market, we expect its recovery to consolidate, 2022 and 2023 ending with employment growth of 2.7% and 2.1%, respectively. This will be the key factor to continue underpinning growth in household income, which we expect to post a cumulative 8.5% increase over the period 2022-2023.
Another factor that will also contribute to the growth in consumption is the improvement in consumer confidence, which has recovered significantly, particularly thanks to the successful vaccination campaign. Although we do not rule out the possibility of further waves of infections, we are confident that pressure on hospitals will remain limited over the coming months thanks to the effectiveness of vaccines and the high percentage of the Spanish population that has been vaccinated. This should mean that, in the coming months, there will be no need to impose such severe restrictions on mobility and business as those in place until last spring. This is one of the main assumptions underlying our macroeconomic scenario. In this respect, one of the major risks is the possible emergence of new variants of the virus that reduce vaccine efficacy.
In addition to the three factors mentioned above, we also believe that consumption will be supported by the continuation of accommodative financial conditions as we do not expect the ECB to start raising interest rates until 2024.7 This will encourage more consumer credit in order to finance, above all, the purchase of durable goods. Finally, the European recovery plan (NGEU) will also boost consumption over the coming quarters. One of the main aims of Europe’s recovery and resilience plan is to encourage sustainable mobility and renovate housing to promote energy savings, which will also boost the consumption of durable goods such as electric cars and more energy-efficient air conditioning appliances.
Although we expect the recovery in consumption to remain strong over the coming years, a few obstacles have appeared in recent months that will take some shine off it. Firstly, energy prices, both electricity and fuel, have risen sharply in the second half of the year. This increase reduces the purchasing power of households, which ultimately limits the ability of consumption to recover. Although we believe that energy prices will normalise over the course of 2022, we expect the impact on consumption growth in 2022 to be around 0.7 pp.8
Secondly, the sharp rise in international demand over the past few months has led to bottlenecks in global supply chains, restricting the capacity of supply to rally. As a result, growth in consumption will also be limited by longer delivery times for some consumer products such as vehicles, and by rising prices due to mismatches between supply and demand in some sectors. In any case, according to the latest available indicators, we believe these obstacles will start diminishing from Q2 2022 onwards, so the final impact on the recovery in consumption is expected to be limited.9
All in all, the obstacles that have appeared recently will take some of the steam out of consumption’s recovery but the underlying factors supporting it are solid. We therefore expect consumption to post relatively high growth rates in both 2022 and 2023: 5.7% and 3.6%, respectively.
The restrictions put in place to curb the spread of the coronavirus and caution due to the prevailing uncertainty led to a large increase in savings by Spanish households in 2020. Specifically, we estimate that cumulative savings from the pandemic reached €46.6 billion, 3.7% of 2019’s GDP. This sharp increase in savings has diminished as we have been able to return to our old habits, leading to a rapid recovery in consumption; a trend that will most likely continue in the coming quarters.
The restrictions put in place to curb the spread of the coronavirus and caution due to the prevailing uncertainty led to a large increase in savings by Spanish households in 2020. Specifically, we estimate that cumulative savings from the pandemic10 reached €46.6 billion, 3.7% of 2019’s GDP. This sharp increase in savings has diminished as we have been able to return to our old habits, leading to a rapid recovery in consumption; a trend that will most likely continue in the coming quarters.11
How was this increase in savings distributed across different population groups? Using information from more than 10 million CaixaBank clients, duly anonymised, we reconstructed the real-time trend in household gross disposable income (GDI) and consumption by both income group and age.12
As expected, the increase in savings was especially pronounced among those with higher incomes: high and medium-high income groups accounted for almost two-thirds of the additional savings generated in 2020 as a result of the pandemic, as can be seen in the chart below.
The results seem self-explanatory: restrictions were imposed on the whole population and entailed an involuntary reduction in consumption, especially for services and durable goods, which resulted in those people with higher incomes to save a larger proportion of their income.
When we break down the excess savings by age, we can see that seniors (aged 60 plus) accounted for just over half the savings generated at an aggregate level; adults (aged 30-59) one third, and young people (16-29) a small proportion (see the chart below). Again, the result seems plausible: older people were subject to the same restrictions as the other demographic groups but the impact on their purchasing power was lower.
The pent-up demand resulting from the toughest months of the pandemic is driving strong growth in consumption across all population groups, from the lowest to the highest income groups. In fact, this has already taken consumption to above its pre-pandemic levels in 2021, both at an aggregate level and across all income groups.13 This huge drive from demand, which can be observed across all the major developed countries, helps to explain the logistical difficulties occurring at a global level in satisfying such a rapid recovery in demand.
In any case, there are some notable differences between the different groups. Among low-income people, the rebound in consumption is more vigorous compared to the pre-pandemic period while the consumption growth rate is lower among those with higher incomes.14 Nevertheless, it should be noted that, given that people with higher incomes tend to have a greater volume of consumption, although the growth rate is lower their contribution to the aggregate growth in consumption is still significant. Specifically, for 2021 we estimate that the 20% of households with the lowest incomes have contributed around 10% to Spain’s aggregate consumption while the 20% of the population with the highest incomes have accounted for more than 30% of the total.
In terms of the demographic profile, the strong growth in consumption among young people is notable. For seniors our projections show strong growth in spending in 2021 compared with 2019, driven largely by the aggregate increase in savings in this group. On the other hand, consumption by adults is recovering more moderately compared with the other age groups. The fact that the economic uncertainty associated with COVID-19 has not completely dissipated and that other sources of risk have emerged, such as supply shortages and rising energy prices, could explain the slower revival in consumption among this demographic group, which tends to accumulate a higher level of debt and is perhaps moderating its consumption for precautionary reasons.
In short, the recovery in consumption in 2021 has been a palpable reality reaching a broad, heterogeneous set of households, particularly among young people and low-income groups. Looking ahead to 2022, the large amount of savings accumulated at an aggregate level during the pandemic suggests the recovery in consumption still has a long way to go, especially among high-income groups, provided the logistical problems in global value chains are resolved and inflation normalizes.
Historically, and in general terms, increases (or decreases) in consumption go hand in hand with larger increases (or decreases) in consumer credit. This relationship is particularly close in the case of durable goods, which are the most frequently financed given that they tend to be larger expenses.
Historically, and in general terms, increases (or decreases) in consumption go hand in hand with larger increases (or decreases) in consumer credit. This relationship is particularly close in the case of durable goods, which are the most frequently financed given that they tend to be larger expenses.
Unlike past crises, this time the recovery in consumption will be greater: we expect nominal consumption growth in 2022 to be larger than in the gradual recovery from the previous crisis, continuing the momentum seen in 2021. This faster speed of recovery can be explained by the fact that much of the savings generated in 2020 were forced and are expected to be released relatively quickly, and also because economic support measures have mitigated the impact of the crisis on households. This booming consumer recovery will also drive further growth in consumer credit, although the extent of the rebound will depend on how excess savings are distributed.
During 2020, household consumer debt shrank by 2.6% annually due to the collapse in consumption (down by 12% in 2020) as a result of restrictions on mobility. These exceptional circumstances also had an impact on new consumer credit, which fell by 26.6% year-on-year. The reduction in debt was partly offset by legislative and sector moratoriums for the most vulnerable households.
During 2021, and following the lifting of mobility restrictions, consumption recovered and, with it, new loans, which picked up strongly.15 This moderated the reduction in household debt for consumption purposes.16 When we use internal CaixaBank data to study the trend in debt during 2021 by income level,17 we observe that it increased for the lowest income group, fell significantly for the medium-income group and fell more slightly for high-income earners.
With regard to the medium-income group,18 the result is consistent with a deleveraging process as they were the group that accumulated the largest amount of debt before the pandemic (58% of consumer debt was concentrated in this group). This group also saved considerably during 2020, accounting for almost 60% of the aggregate excess savings in the year, according to estimates based on internal data. Our results suggest that the people in the medium-income group have taken advantage of excess savings not only to consume19 but also to deleverage. In other words, there has been something of a pushback for this group. In contrast, those with lower incomes achieved modest excess savings in 2020 and they are also the ones who have consumed most vigorously in 2021 compared with the pre-pandemic period. It is therefore logical that they should be financing this high consumption, which would explain why their debt has increased since the end of the worst phase of the pandemic. Finally, high-income earners, who accumulated 38% of the excess savings in 2020, have a low consumer debt burden relative to their income, which would explain why they have not devoted these savings to reducing their debt to the same extent as medium-income earners.
To understand future consumption financing needs we must first understand how much of the pent-up consumption was released in 2021 and how much can be met by savings accumulated during the pandemic.
Using internal data, we have estimated the additional consumption that took place in 2021 compared with the consumption that would have taken place before the pandemic by income group.20 When compared with the excess savings generated in 2020 by income group, the results suggest that, on aggregate, half the excess savings would have been used in 2021. In particular, our results (see the chart below) show that low and medium-low income groups would have consumed all their excess savings from the pandemic in 2021, while medium-income groups would have consumed 60% and the medium-high and high-income groups clearly less than half. These results are in line with the recovery in new loans observed in 2021. Low-income and medium-low income groups do not have enough savings accumulated in 2020 to meet their pent-up demand, so they have resorted to bank financing, in addition to using savings accumulated before the pandemic. In contrast, the rest of the income groups still have a cushion of savings to finance their consumption in 2022 or to increase their long-term savings for future investments or retirement.
Looking ahead to 2022, consumption growth is expected to be strong and above its historical average. This growth will be supported by favourable financial conditions, by the remaining pent-up demand and the funds from the European recovery plan NGEU. The aim of these European transfers is to encourage sustainable mobility and the renovation of housing to promote energy savings, among other areas, which will boost the consumption of durable goods such as electric cars, recharging points, appliances, air conditioning and more energy efficient heating, etc. Moreover, aid to the private sector does not cover the entire investment, so co-financing will be required.
Much of the consumption in 2022 by low-income and medium-low income groups, especially of durable goods, will rely on bank financing as they will no longer have the savings cushion from 2020. Additionally, for medium-income and medium-high income groups, we estimate that the additional consumption expected in 2022 compared with the average pre-pandemic consumption will be greater than the funds they have left over from their pandemic savings (provided current supply problems do not persist), so they will also require other sources of financing such as bank financing.21 As a result, new consumer credit is expected to grow significantly in 2022.
Analyzing of consumption growth since May 2021, when the last state of emergency ended, we can see that the recovery in spending on transport, and especially on leisure, hospitality and tourism, was particularly strong. The sectors hardest hit by the restrictions (most of them still in force in Q1 2021) are therefore the ones that are recovering the most. On the other hand, consumer durables (furniture, textiles, etc.) have benefitted much more modestly from the pick-up in consumption, as will be seen below, while spending on basic necessities has fallen (except among low-income households), partly because these goods can be replaced by the services offered by the hospitality industry.
Based on the analysis of consumption growth since May 2021,22 when the last state of emergency ended, we can see that the recovery in spending on transport, and especially on leisure, catering and tourism, was particularly strong. The sectors hardest hit by the restrictions (most of them still in force in Q1 2021) are therefore the ones that are recovering the most.23 On the other hand, durable goods (furniture, textiles, etc.) have benefitted much more modestly from the pick-up in consumption, as will be seen below, while spending on basic necessities has fallen (except among low-income households), partly because these goods can be replaced by the services offered by the catering industry.
Recovery of consumption by income group since the end of the state of emergency
Another interesting aspect is that, in most sectors, consumption has picked up more readily among the lower income groups, presumably because they had already released all their pent-up demand in 2021. In terms of consumer age, the patterns are very similar. However, the substitution of staples for leisure and catering services has been greater among seniors. This group has registered the highest growth rates in the staple goods sector since the outbreak of the pandemic, so it is plausible that, once they feel safer thanks to the advances made in the vaccination campaign, they have replaced part of this expenditure with spending on catering.
The recovery in spending on durable goods has been more contained24 in the different sub-sectors that can be captured via CaixaBank’s internal data. This is mainly due to the fact that the reduction suffered during the most critical phases of the pandemic was less than in other sectors, thanks to its great capacity to adapt to online sales, a channel currently enjoying remarkable growth rates that look like continuing, cushioning the fall in in person sales. Consequently, although durable goods sales are picking up, their recovery has not been as strong as in other sectors.
A second factor has to do with supply chains and production capacity. The fact that most of the fall in consumption during the pandemic can be explained by the imposition of restrictions meant that demand has recovered much faster compared to previous crises (indeed, consumption levels in all categories of goods already exceeded 2019 levels in 2021). In many sectors, however, supply has not been able to recover as quickly.
This mismatch between supply and demand has put enormous strain on supply chains, especially in maritime transport. This situation has particularly affected the durable goods sector, where the final product is often the result of a long production chain. The price for sending a container ship has soared in the past few months, reaching levels not seen in recent years, causing many companies to be left without the supplies they need to maintain their level of production.
Finally, another aspect to take into account which is also related to the mismatch between supply and demand brings us to China, the world’s factory. The new guidelines set by Beijing in terms of containing energy consumption to keep prices in line and meet environmental targets have led to a significant number of companies being forced to reduce or even stop production for a few days. Together with the aforementioned tension in supply chains, both issues may pose a downside risk to the durable goods market.
One of the variables with the greatest impact on consumption decisions are prices, which fell on aggregate by 0.3% in 2020 in Spain according to official data.25 However, there were marked changes in consumption patterns last year, making it very difficult to accurately measure the figure actually faced by consumers. CaixaBank’s own estimates based on high-frequency internal data suggest that inflation was somewhat higher, namely 0.1%.26 Moreover, inflation did not affect everyone equally, with differences depending on age and income.
Essentially, only two ingredients are required to calculate the inflation rate: a consumer basket containing the goods and services consumed by a representative household and the change in the price of these goods and services.27 However, the problem of isolating changes in the quality of goods from the changes in prices is well known. So is the difficulty of pricing goods and services that, for some periods in 2020, could not be sold because of the pandemic’s restrictions. We will therefore focus our attention on an additional complication: changes in the composition of the representative consumer basket. This basket consists of a wide range of goods and services divided into 12 major groups,28 each with a weighting that reflects its relative importance in the average consumer basket.
Prior to the pandemic, the annual review of these relative weights went largely unnoticed due to the stability in consumption patterns. However, the advent of COVID-19 and the consequent imposition of restrictions completely have altered our consumption habits. The official agencies in charge of calculating inflation found themselves tied to a distribution of relative weights based on a basket that was representative in 2019 but had ceased to be so as of March 2020. So the question we must ask ourselves is: if the official bodies had been able to modify the relative weights of the representative basket to adapt it to the new situation, what would have been the inflation rate for the Spanish economy in 2020?
To answer this question, we have used CaixaBank’s internal, fully anonymised data on card payments at point-of-sale (POS) terminals.Given that the HICP includes consumer spending by residents and non-residents in Spain, we have extracted, from the internal data, the spending with Spanish and foreign cards at all the bank’s POS terminals. First, to ensure the consumer basket resulting from our internal data is representative, we compared the relative weights according to our 2019 data with the official data for the groups of goods and services we can capture using POS card transactions (i.e. those whose payment is not mostly made via transfer or direct debit).30 The result of this comparison clearly shows that the consumption observed via our internal data fits quite well with the consumption patterns of the average consumer, as shown in the following chart.
One year later, in 2020, the pieces of the puzzle have fallen apart and a disparity has emerged between the official relative weights (calculated in early 2020 based on 2019 consumption patterns) and the relative weight distribution shown by our internal data. The goods and services most affected by the restrictions (transport, hotels, cafés and restaurants, and leisure and culture) are the ones whose relative weight decreased the most, being offset by the group of food and non-alcoholic beverages. This redistribution of weights is due to the fact that we are spending much more time at home than in pre-pandemic times, which also explains the slight increase in household expenses. The role played by e-commerce as a cushion against the slump in in person sales in the clothing and footwear group is also evident, as shown in the chart below.31
As the basket used by the official agencies to calculate inflation in 2020 gave too much weight to the groups in which prices grew less or even fell sharply,32 and not enough weight to the food and non-alcoholic beverages group (with a 2.4% price increase in 2020), all the evidence suggests that the official inflation series suffered from a downward bias. Consequently, from April onwards and according to our internal data, inflation was higher (and deflation lower in those months when both series show a fall in prices) than the figures published by the National Statistics Institute, as shown in the first chart below. In contrast, this gap between the two series is non-existent during 2019 and much smaller in 2021 once the official agencies updated the relative weights of the consumer basket at the beginning of the year, adapting it to the consumption patterns observed during the first year of the pandemic (second chart below).33
So far we have analysed inflation in relation to the average consumer but the basket of goods and services obviously varies depending on the demographic group that consumes it. After breaking down our total clients into age group and income level, we have concluded that the inflation rate was higher for the over-60s and lower for 16-29 year olds during 2020 (see the chart below).34 This difference between generations can be explained by their differing consumption patterns: seniors spend a higher proportion of their expenditure on basic necessities (inflationary during 2020) and less on transport or leisure and culture (deflationary), as opposed to younger people.35
Likewise, the chart below shows how the consumer basket became more expensive for consumers with a salary in the lower part of the distribution (10th percentile) compared with the higher income group (90th percentile), something that can be explained by the fact that low incomes concentrate a greater part of their consumption on basic necessities and less on goods and services related to transport, tourism and leisure.36
To conclude, having verified that inflation estimates for Spain in 2020 would have been higher if the data on consumption patterns had included real-time changes, it is important to gauge the potential of high-frequency data in a changing environment such as the one we are experiencing. It is true that events as extreme as the current health crisis, which transformed the structure of spending overnight, do not happen often. However, our world is becoming more and more dynamic, to the extent that having this type of information will become increasingly important, especially for a variable such as the inflation rate.
The distribution of consumer spending over the month, a key question for understanding consumer behaviour, has not yet been studied in the depth it deserves because of the scarcity of high-frequency public data. How do consumers allocate their spending week by week? How much more do they spend at the beginning of the month, which is when most people are paid? Do we consume with the same intensity regardless of our age or our income? Thanks to the use of CaixaBank’s internal data on a daily frequence, we are able to carefully analyse the time patterns of consumption and answer these questions.
Based on fully anonymised internal data on payments and cash withdrawals between 2017 and 2019 using cards issued by CaixaBank,37 we can confirm that the percentage of spending is highest during the first week of the month38 and decreases throughout the second and third weeks, before picking up slightly in the fourth week (see the chart below).39 The fact that a significant part of the sample analysed receives their income during the last days of the month40 is one of the reasons why the percentage of spending picks up in the fourth week.
There are three possible explanations (which are not mutually exclusive) why consumers spend more just after being paid. The first is associated with a consumer profile that consumes more as soon as they can. We all know someone, perhaps even ourselves, who enjoys the luxury of dining out or getting away for the weekend at the beginning of the month but tightens their belt at the end.
Economic theory tells us there are two reasons behind this behaviour: impatience and temporal inconsistency. The first, simply states that some people value present rewards more than future ones, resulting in them consuming more as soon as they have fresh income rather than spreading their consumption evenly over the month. The second reason is a somewhat less intuitive concept, although it has also been widely studied.41 This argues that there are other types of individuals who, despite valuing their future well-being (they are not impatient), are lacking in willpower and therefore end up focusing on the present when making their consumption decisions, without taking tomorrow into account. In other words, these consumers exhibit a short-sightedness that becomes accentuated in the week they receive their income.
The second explanation is that consumers choose to concentrate their spending in the first week of the month for organisational reasons. For example, in order to save time they may decide to go to the supermarket and do the whole month’s expenditure during the first week, instead of doing weekly shopping. Another example would be a monthly travel pass, which may be bought at the beginning of the month but is used throughout the weeks. In this respect, these consumers are neither impatient nor short-sighted, even though they concentrate their spending in the first week of the month, as they distribute their consumption evenly.
The third explanation for tending to spend more at the beginning of the month revolves around cash withdrawals. According to an ECB study42 that takes an in-depth look at the use of cash by households in the euro area, when asked what the two biggest advantages of handling cash were, 42% of respondents said that it allowed them to keep better track of their spending. This response was the most popular and points to the fact that cash could act as a commitment device. In other words, in the first week consumers might withdraw from an ATM a significant portion of the cash they estimate they will need during the month but would consume it evenly.43
To find out which of the above explanations is more important, we have broken down the distribution of spending per week (shown in the chart above) into cash withdrawals and card spending (see the chart below). Considering that cash withdrawals show the highest concentration in the first week, we can conclude that the use of cash as a commitment device is a factor to be taken into account. On the other hand, if we look at card spending, we can see that its distribution is much more uniform with a percentage close to 25% in the four weeks of the month.
Distribution of spending over the month
Taking advantage of the granularity of our internal data, we can go a step further and analyse whether the conclusions drawn for the aggregate data are the same for the different income groups and generations. In the first case we divided CaixaBank clients as a whole into low-income (up to 1,000 euros per month) and high-income (over 2,000 euros per month), while in the second case we divided them into young people (aged 16 to 29), young adults (aged 30 to 49) and senior adults (aged 50 to 64).
The left scale of the chart below shows the breakdown of total expenditure by income group. Regardless of the wage level, we can see that the percentage of spending is still higher during the first week of the month and decreases in the second and third week (on average for all the months analysed). That said, there is some heterogeneity between the low and high-income groups since the distribution of spending is more unequal for the former. Nevertheless, the bulk of the difference observed in total expenditure can be explained by the behaviour of cash withdrawals, as can be seen in the central part of the same chart. In other words, if we look at card spending (right scale of the chart), we can see that it is distributed more similarly than total spending over the month in the two income groups.
These results indicate the importance of the use of cash as a commitment device, especially for low-income groups, which should not be surprising considering they have more limited resources and must therefore have a clearer plan for their spending.
Distribution of spending over the month by income group
As for the analysis by generation, the conclusions drawn regarding the distribution of spending by week also hold true, regardless of age: spending is higher in the first week of the month and lower in subsequent weeks. However, it can also be seen that young people spend the most unevenly throughout the month while senior adults spend the least unevenly.44 Likewise, as with the aggregate results and by income group, expenditure appears to be distributed more evenly when only card spending is taken into account, as can be seen in the chart below.
Distribution of spending over the month by generation
In conclusion, using high-frequency internal data we have found that consumers do not spread their spending evenly throughout the month but tend to spend more in the first week. Moreover, this behaviour is more pronounced for low-income groups and young people.
In 2021, a milestone was reached that was hard to imagine a year ago: the mass vaccination of a large part of the population in advanced countries. Although new waves of infection are occurring, in those countries where population vaccination levels are higher it is likely that activity and travel restrictions as severe as those that have set the pace of economic development since the outbreak of the pandemic will not have to be reimposed.
In the course of 2021 we have seen that, in the wake of the pandemic, a misalignment has emerged in the real estate sector between a demand that has recovered very quickly and a supply that is more dependent on structural factors and therefore continues to lag behind. As a result of this misalignment, house prices have started an upward trend which may continue to some extent in the coming quarters as a result of higher production costs in the sector and problems with the supply of certain raw materials. Nevertheless, in the medium term, as new supply enters the market and tensions in global supply chains ease, prices should return to a growth rate that is more in line with the trend in household income.
After the historic shock of the pandemic, the situation of the Spanish economy improved notably throughout 2021. The progress made with vaccinations and the effectiveness of the measures implemented to mitigate the economic and social impact of COVID-19 have enabled activity to recover progressively. We expect this positive trend to improve further in 2022, thanks in part to an additional boost from the NGEU funds. Our forecasts therefore predict that Spain’s GDP will accelerate, growing by 4.4% in 2021 and 5.9% in 2022.
Within this context of economic recovery, Spain’s real estate market is posting a very positive trend, especially in terms of demand. So much so that the revival in house sales is surprisingly vigorous: 468,000 transactions were completed by October 2021, a growth of 35.9% compared to 2020 and up by 8.3% on 2019. In fact, activity in the residential sector is at its highest level since 2008. A large part of this revival in demand has come from a reduction in pent-up demand and the «forced» savings accumulated during the months of lockdown and severely restricted travel, combined with highly favourable financing conditions, which make it more attractive to buy and invest in real estate assets. The residential sector is therefore on track to close 2021 with 545,000 sales in the year as a whole.
Demand for housing is above its pre-COVID levels but with notable regional differences
Across the autonomous communities, so far in 2021 we can see that the regions that have yet to regain their level of business in 2019 are those whose economy has suffered most from the consequences of the health crisis. This is particularly the case of the Canary Islands and Balearic Islands as they depend most on the arrival of tourists, where the number of house sales is more than 5% below pre-pandemic levels. The Community of Valencia and Basque Country are the other two regions where residential demand is particularly sluggish as they were markedly affected by the severe restrictions resulting from the health crisis due to their dependence on foreign demand (in the case of the former) and the sectoral composition of the region’s economy (in the case of the Basque Country).
but post-lockdown trends are already beginning to moderate
As the sector evolves towards the new normal, we are starting to see that some of the main features characterising post-lockdown demand are easing: (i) not only is there a recovery in the purchase of new builds but used house sales are also growing and are above pre-COVID levels; (ii) the preference for living outside large cities or provincial capitals is moderating (the rise in teleworking and a search for greater social distance led to interest in housing outside large urban centres);1 (iii) the size of the dwellings purchased, after increasing significantly in 2020, seems to have stagnated in Q1 2021; (iv) the sale of single-family homes (as a percentage of total sales) peaked at the end of 2020, and (v) foreign demand is recovering, much more clearly from the summer of 2021 when the success of the vaccination campaigns in Spain and throughout Europe allowed for a drastic reduction in restrictions on travel with a consequent increase in tourist arrivals.2
By 2022, the main drivers of residential demand will continue to support the sector. Firstly, the outlook for the economy as a whole is favourable (we expect GDP to regain its pre-pandemic level by then) and the labour market will maintain a good job creation rate (having reached its pre-COVID levels in 2021). Secondly, household confidence continues to rise and is already at similar levels to those recorded in 2019, according to the European Commission’s confidence indicator. Thirdly, household disposable income is already showing clear signs of recovering and a large part of the savings accumulated in recent months will also be allocated to investment in housing. In addition, household formation is picking up after the decline posted during the months of lockdown (124,000 households have been created in the past year up to Q3 2021, a very similar figure to 2019). In turn, foreign demand for housing will continue to recover as tourist arrivals increase.3 Finally, financing conditions will remain favourable (mortgage interest rates have recorded new lows in 2021) and no interest rate hikes are expected from the ECB next year.4
and a large part of the savings accumulated in recent months will also be used for investment in housing
While demand factors remain clearly favourable, the temporary factors that have been boosting demand in 2021 will dissipate in 2022, so we expect demand to moderate
towards its pre-pandemic levels, slightly above 500,000 transactions per year.
Certificates of final completion (available until September) have kept up the good figures posted in 2020. So far this year, 68,593 homes have been completed, 13% up over last year and 25% over the same period in 2019. In other words, the number of new homes delivered has not only exceeded pre-pandemic levels but is at its highest rate since 2012.
It should be noted that, although positive, these figures do not reflect the current situation of the supply of new builds as they refer to developments which, in many cases, had already been started before the pandemic. On the other hand, the supply of new builds, which is much more dependent on structural factors, continues to lag behind. Between January and September, new building permits rebounded by 26% year-on-year but are still 3.9% below their 2019 level.
when uncertainty is high. However, the current situacion is not alarming
Should the current rate continue, just over 100,000 new building permits will have been issued in 2021 as a whole, very similar to the figure in 2018 and 2019. Moreover, the medium and long-term outlook for supply is still favourable, considering the strength of the factors that are driving demand and the boost provided by the arrival of the European reconstruction funds (NGEU) which, in the area of housing, will be allocated for refurbishment, in line with the ambitious environmental targets underpinning the allocation of these European funds.
However, in recent months new dark clouds have appeared on the horizon that could hinder the recovery in supply, related to rising raw material prices and the blockages experienced by international trade. According to Eurostat data, the sector’s costs are growing by more than 12% per year and the prices of certain supplies by more than 15% (latest available data are from September). In the same vein, a recent survey conducted by the industry’s businesses, the National Confederation of Construction (CNC), shows that 75% of companies have suffered some shortage or unusual delay of wood, aluminium or steel, among other materials. Given this situation, the sector is already warning of delays in construction work and is asking for more flexibility in terms of renegotiating contracts, extending deadlines for completing projects without penalties and speeding up tenders for European fund projects.
The general improvement in demand and the more limited capacity of developers to react and, therefore, the smaller recovery in supply, are causing a certain upward trend in house prices, particularly in the segment of new builds. Since year-on-year rates bottomed out between Q4 2020 and Q1 2021 (depending on the price indicator), prices have been on an upward trajectory throughout 2021. The most recent data available show further recovery in prices in Q3 2021 of 7.4% year-on-year (5.4% in Q2), according to the College of Registrars’ quarterly repeat house sales price index; by 4.2% year-on-year (3.3% in Q2) according to the INE’s house price index based on transactions, and by 2.6% (2.4% in Q2), according to the appraised value of free housing published by the MITMA. With this increase, house prices exceeded their pre-pandemic level in Q3 2021 (+0.5% compared to Q4 2019). This upward trend can be observed across the autonomous regions as they all posted year-on-year gains in Q3 2021. However, the degree of recovery across regions is disparate (see the chart below). Of note is the strong growth in prices since Q4 2019 observed in the Balearic Islands, Andalusia, Cantabria, Asturias and the Community of Valencia, among others, compared to other regions that have not yet exceeded their pre-pandemic levels (especially Navarre, Aragon and Castilla y León).
has caused prices to reverse their trend and start growing
In the short term, the dynamism of demand compared to supply and rising construction costs suggest that house prices will continue to have some upside potential. In addition, favourable financing conditions will go on supporting investment in real estate assets. However, in the medium term, taking into account the absence of structural imbalances in the fundamentals of both demand and supply, we do not expect prices to embark on any worrying upward spiral. In fact, their growth should be more in line with the trend in household income once the «champagne effect» of demand becomes more diluted, supply recovers more significantly and commodity prices moderates.5
The rapid rise in house prices in many European countries during the pandemic has raised concerns about the possibility of a price correction in the coming quarters. Should we be worried in the case of Spain? Given the current macroeconomic scenario, we argue that there is no need for concern. This conclusion is largely due to the good financial health of households as a whole and to reasonable housing affordability in aggregate terms. Neither do we expect an upward spiral in prices: prices may pick up while the economy moves back to its pre-pandemic levels but, in the medium term, we expect house prices to grow in line with household income. We have confirmed this using CaixaBank Research’s new risk model (HaR).
Spain’s real estate market is facing both downside and upside risks. The emergence of a new, more contagious and vaccine-resistant variant of the virus or more severe and persistent bottlenecks in global supply chains than we currently anticipate could cause another slump in activity, with the consequent impact on the housing market. Conversely, greater growth in household credit accompanied by sustained high economic growth could lead to larger house price rises. The questions we attempt to answer in this article are the following: how can we quantify these risks and, should the downside (or upside) risks materialise, how much would house prices fall (or rise) next year?
A traditional way of answering these questions is to examine the historic distribution of real house price growth in Spain (see the first chart).6 Historically, in half the quarters, growth has been equal to or greater than 1.8% (mathematically, this value corresponds to the median of the distribution). If we look at the tails of the distribution, we can see that there has only been a fall in the real price of housing equal to or greater than 8.9% in 5% of the quarters (5th percentile of the distribution), while only in 5% of the quarters is there growth equal to or greater than 13.5% (95th percentile). Assuming this was a typical year, we can conclude that price growth in the following year would most likely be between –8.9% and +13.5%. Depending on which risks materialise, we would move closer to one threshold or the other (and, except in a truly exceptional situation, we would not expect to exceed these boundaries).
The main limitation of this approach is that it gives us a very wide range of possible values because it does not take into account the current state of the economy. If we were to use this additional information, we could project a more accurate lower and upper threshold for next year’s price growth. In this article, we set out to do just that: using a novel methodology developed by the IMF,7 we have modelled the distribution of house prices at 1 year and 3 years in the future as a function of various key economic indicators (real GDP growth, household credit growth as a percentage of GDP, and housing affordability). In this way, we can narrow down the most probable house prices for a specific timeframe.
that measures the downside and upside risks for the real estate market according to the projected economic scenario
CaixaBank Research’s HaR (House Prices at Risk) model is based on quantile regressions8 that enable us to analyse the impact of different factors on the 5th percentile and 95th percentile of the distribution for the real change in house prices in 1 year and in 3 years’ time. As explanatory variables, we have included a financial factor (household credit growth as a percentage of GDP),9 a macroeconomic factor (real GDP growth) and a factor specific to the housing market (housing affordability, defined as the ratio of house prices to the gross income of the median household). This is used to estimate the impact of each factor (the marginal effect) on the distribution of the change in Spanish house prices for a specific percentile and timeframe (see the chart).10
Here are three examples of how these results should be interpreted:
As expected, an increase in real GDP growth is associated with greater house price growth, while a higher housing affordability ratio leads to lower house price growth. An interesting result is that, when there is a boom in household credit to purchase housing, the 5th percentile increases at 1 year but decreases at 3 years. One possible explanation is that an increase in credit affects house prices through two channels. On one hand, in the short term the entire distribution moves to the right: the increased flow in credit boosts demand for housing and pushes up prices. On the other hand, a credit boom increases the likelihood of a real estate bubble (as in the 2008 crisis), which means that, in the medium term and if the bubble bursts in the medium term (adverse scenario), the price correction will be much greater.
but increases the risk of a further price correction in the medium term, as seen in the 2008 crisis
The HaR model allows us to see the evolution over time of the 5th percentile and 95th percentile for the distribution of the growth in Spanish house prices at 1 year, conditional on the values of the explanatory factors (economic situation) at each point in time. In the chart below, the grey line and red line mark a range within which we would expect house prices over the coming year to lie.11
the HaR model provides us with much more accurate ranges within which the following year’s prices will oscillate.
Some of the results of the HaR model are striking. Firstly, if we compare the percentiles obtained using the model (grey line and red line) with the historic percentiles (dotted lines), we can see that they differ substantially: the model’s percentiles give us a much more precise range within which prices will oscillate over the coming year. For example, during the 2008 crisis, the model tells us that house prices should fall because of the economic situation observed, information not provided by the historic percentiles. Secondly, during the gestation period of the housing bubble prior to the 2008 crisis, the model was continually subject to upside surprises as the economic situation (in particular, the tensions observed in affordability) suggested that growth in prices would moderate. The same thing happens with the COVID-19 crisis: the model found it surprising that house prices were so resilient despite the slump in GDP.
The most interesting information comes when we analyse the current situation (with data up to Q4 2021) and the future prospects of the real estate market. The model tells us that, even if the downside risks were to materialise, it would be highly unlikely that real house prices would fall by more than 3.9%. Although this lower threshold would imply a considerable decrease decrease, if compared with the historic lower threshold (8.9%), we can see that the coming year should bring relatively moderate downside risks. On the other hand, even if the upside risks were to materialise, the model tells us that it would be highly unlikely that real house prices would rise by more than 4.8%. Looking ahead, and based on CaixaBank Research’s central scenario forecasts, the model’s percentiles indicate that downside risks are contained (the 5th percentile even reaches 0 in 2022) due to the significant GDP growth we expect next year. The upside risks are somewhat greater but limited: as GDP growth returns to normal in 2023, and thanks to the absence of a credit boom (unlike in the pre-crisis period of 2008), price rises should also be moderate.
neither a severe price correction nor an upward spiral are likely
This result is consistent with the assessment recently issued by the Bank of Spain12 on the situation of the country’s real estate market. In particular, house price imbalance indicators suggest that prices are above but nevertheless very close to their equilibrium levels. This diagnosis for Spain contrasts with the situation of real estate markets in other European economies, as the ECB has noted in its latest stability report.13 Specifically, the ECB warns that the risks of price corrections in the medium term have increased substantially due to the overvaluation of house prices in some countries and to the fact that credit standards have been relaxed, expressing some concern about the emergence of a debtdriven real estate bubble. Given this situation, the ECB recommends that those countries in which such vulnerabilities are emerging should consider the option of gradually adjusting some of the macroprudential policy instruments at their disposal. However, we believe the situation of the Spanish real estate market does not warrant such instruments to be implemented in our country, at least in the short term.
The economic policies implemented during the pandemic have cushioned the impact of the crisis on families’ financial situation. On the one hand, a further fall in household income has been avoided while, on the other, the ECB’s accommodative monetary policy has led to a reduction in debt interest payments. A detailed analysis of the effort required by households to pay off their mortgages, based on CaixaBank’s own internal data, duly reweighted to be representative of the Spanish population, shows that these measures have managed to reduce the mortgage burden during the pandemic for most households, although pockets of vulnerability still remain among low-income households.
The impact of the COVID-19 crisis on households has been considerable. However, as we will see below, economic policies have played a crucial role in mitigating the adverse economic effects of the pandemic on household finances.
On the fiscal front, a series of measures were activated to support household income, most notably public transfers to workers who had been furloughed. In addition, unemployment benefits were improved, basic supplies were secured, including rent support, and a minimum living wage scheme was put in place. Legal and sectoral moratoriums on both mortgage and consummer loans were also introduced to prevent households in difficulty from defaulting on their financial obligations.14 These measures together ensured that the annual decrease in gross household disposable income (GDI) was «only» 4.9% in 2020, half the decline in nominal GDP (–9.8%).
In 2021, the rapid progress made in vaccinating the population has led to a remarkable recovery in activity. In this respect, it should be noted that the recovery in employment is more dynamic than in activity (in November 2021 the number of workers effective registered with Social Security was already above pre-pandemic levels, while GDP in Q3 2021 was still 6.6% below its level of Q4 2019). As a result of this labour market dynamism, household GDI grew by 1% in the first half of 2021, albeit remaining below its 2019 level (–3.9%).
income and lower interest rates have eased the financial burden on households as a whole
With regard to monetary policy, the speed and forcefulness of the ECB’s actions have enabled very favourable financial conditions to be maintained, helping to reduce the interest payments associated with the debt taken by households. While the household debt ratio would have risen slightly between Q4 2019 and Q2 2021,15 the financial burden was reduced thanks to the decline in the average cost of debt, which is at an all-time low (see the chart below).
The ECB’s monetary policy is helping to reduce the average cost of household debt during the pandemic
Favourable financial conditions have boosted housing demand and this has been reflected in more credit to households for house purchases, especially in 2021, as uncertainty fell and the economic environment improved substantially.16 Specifically, new loans to purchase a home only shrank by 2.1% during 2020 and recovered by an exceptional 47.8% year-on-year in the cumulative period of January-October 2021 (also by a remarkable 37.5% when compared to the same period in 2019).17
In this context, the theoretical mortgage burden18 has hardly changed, remaining at around 30% during the pandemic, a level of debt that is generally considered to be healthy and similar to the rate recorded before the housing boom in the 2000s (see the chart below). Note that the mortgage burden has remained stable because the fall in interest rates would have offset the decline in GDI and the increase in house prices between Q4 2019 and Q2 2021 (4.5% according to the house price index produced by the National Statistics Institute).
On the whole, the macroeconomic data paint a fairly positive picture of the financial situation of households during the pandemic, thanks largely the economic policies discussed above. However, such data can also obscure vulnerabilities if the different segments of the population are not taken into account. To analyse the impact of the crisis on the different types of household, we have used CaixaBank’s internal data, duly anonymised and reweighted to ensure they are representative of the Spanish population.19 Specifically, we calculated the mortgage burden; i.e. the ratio of mortgage repayments (reflecting the impact of lower interest rates) to household income (reflecting the impact of the income support policy),20 aggregating the data according to income level,21 the age of the head of household22 and the year the mortgage was taken out.
The chart below shows that the median mortgage burden decreased notably in 2020, a reduction that is due to (i) the impact of mortgage moratoriums, allowing those most affected by the pandemic to defer repayment, (ii) lower interest rates, which would have eased the financial burden of mortgage debt, and (iii) a slight increase in the median income of households with mortgage debt.23 In 2021, based on data up to October, we can see a similar burden ratio to that before the pandemic.
The mortgage burden for households with a mortgage has decreased during the pandemic
When we analyse the trend in mortgage burden by income level (see the chart below), we can see that this decreased for all groups of households and that the largest reduction was experienced by households with the lowest income (–1.4 pp between 2019 and 2020). In addition, the percentage of households with a mortgage burden above 40% (a level often used as a threshold for financial stress) also fell in 2020, especially among low-income households. Despite this improvement, it is important to note that the mortgage burden of low-income households remains significantly higher than that of other households, and that the percentage of low-income households experiencing financial stress is still very high. We can therefore conclude that the measures implemented to tackle the economic crisis have been effective in easing the debt burden of most households, including low-income households. Nevertheless, the vulnerabilities that already existed in some groups before the crisis are still present.
low-income households still suffer from a higher concentration of financial vulnerability
All age groups experienced a reduction in mortgage burden in 2020. Young households were already seeing a strong downward trend before the pandemic, a result that can be explained by a larger amount of outstanding mortgage and, consequently, a greater reduction in mortgage repayments due to falling interest rates.24 Finally, depending on the year when the mortgage was taken out, it can be seen that the greatest decline is concentrated among the mortgages of older cohorts (i.e. mortgages granted between 1996 and 2014, when financial conditions were very different from today), while mortgages granted since 2015, given that these were generally already taken out under more favourable conditions, would not have benefited as much from lower interest rates in the recent stage.
Essentially, the implementation of monetary and fiscal policies has limited the negative impact of the pandemic on the financial position of households, although the vulnerabilities that existed before the pandemic are still present and concentrated among low-income households. While the gradual recovery in activity will continue to support the financial situation of households, lower-income households remain dependent on the support of economic policies, so any premature withdrawal of the stimuli should be avoided. Perhaps the most important source of risk is the spike in inflation, going above 5% by the end of 2021 and fuelling expectations that the ECB will bring forward interest rate hikes. However, the ECB has stressed that the current inflationary episode is predominantly temporary in nature and the institution fully expects to continue its current expansionary monetary stance for some time yet. We should also remember that more than 65% of new mortgages are now fixed-rate, limiting the negative impact of a possible rise in interest rates on the ability of households to meet their repayments in the future.
Based on CaixaBank’s internal data regarding rent payments, we have constructed indicators for the recent trend in residential rental prices at a provincial level and for the largest municipalities. The results obtained show that there was already a generalised slowdown in rent growth before the pandemic arrived, and that the outbreak of the health crisis extended corrections to most provinces and municipalities, with decreases being especially pronounced among the lowest rents and in the most tourist-oriented municipalities.
The trend towards rental price moderation in Spain began before the onset of COVID-19 and the pandemic merely accelerated it. This has been confirmed by the results of the analysis we have carried out using CaixaBank’s internal data on rent payments (duly anonymised and processed in aggregate using big data techniques). Specifically, we select payer-issuer operations that are six months old or less in order to capture the changes in trend occurring in the market, and construct rental price indicators for each province and for the major municipalities in Spain.
Equipped with these indicators, the first chart shows that the year-on-year change in the average for the provinces reached a peak in May 2019 and then began to decelerate markedly in the second half of the year. Specifically, 42% of the provinces and 40% of the municipalities analysed reached their maximum value for new rents before December 2019. Consequently, in many locations we found that rental prices had peaked before the pandemic, after five years of much higher growth than the increase in household income.25
With the arrival of the pandemic, more locations joined the downward trend, which became more pronounced, causing the year-on-year change in the provincial average rental price to reach negative figures from April to July. Several factors probably contributed to this decline, most notably falling household income, which has particularly affected low-income households who tend to live in rented accommodation. For its part, the significant increase in the supply of rented apartments, resulting from the transfer of dwellings intended for tourist rental to the traditional residential market, would also have had an impact on the drop in rental prices in tourist areas, as will be seen below.
The fall in household income and the transfer of properties for tourist rental contributed to this drop in prices
In 2021, growth in rental prices has been in negative figures throughout much of Spain: 65% of the provinces and 55% of the municipalities analysed have lower prices in 2021 (with data up to September) compared to the 2020 average. The latest available data, corresponding to September 2021, show that 46% of the provinces and 42% of the municipalities analysed are still posting a lower average rental price than in December 2019, before the pandemic, so the recovery in the rental market is lagging far behind the sale market.
Special mention should be made of the municipalities in Madrid and Barcelona, marked with red and green circles, respectively, in the following chart. In the first case, rents fell sharply in 2020 (–8.3%) although it is true that this decline started from higher growth rates in previous years, and they began to recover in 2021 (+0.6%). In contrast, Barcelona rents experienced a slowdown in 2020 but rental prices resisted adjustment until October 2020, when the law limiting rents in Catalonia’s stressed markets came into force.26
The moderation in rental prices has accentuated in the aftermath of the pandemic
If we compare the trend in rents in the affected Catalan municipalities (where the rental price of new leases cannot exceed the previous price or the benchmark index) before and after this law’s entry into force and also compare it with the rest of the municipalities, we can see that, since October 2020, the year-on-year change in rental price would have been marginally lower in the affected Catalan municipalities (around 1 pp).27 However, the chart below shows that the rental price in the affected Catalan municipalities was somewhat resistant to falling in 2020, before the law came into effect, which could point to a possible reluctance to adjust rental leases to the market situation, anticipating that it will not be possible to raise rents once the new law is in force. However, it is difficult to carry out a rigorous empirical analysis to gauge the impact of this rental law in Catalonia, since it came into force at a time when the market was already adjusting and, in addition, the pandemic has had a different impact on the rental market in each municipality due to a multitude of factors, such as its degree of dependence on tourism, which will be examined below.28
One great advantage of internal rent payment data that they enable us to analyse the distribution of rents within one location. Generally, available rent indicators report the average rental price in a given area. But the truth is that, within the same location, the range of rental prices is relatively wide.29 Consequently, in order to analyse the trend in rents at different points of the distribution, we has calculated two additional indicators (apart from the average): the 75th percentile indicator (high rents) and the 25th percentile indicator (low rents).30
more than high rents in the provinces
In doing so, we have found that rents at the lower end of the distribution (25th percentile) grew more moderately before the pandemic (up by 5.1% in 2018 versus 5.8% on average) and that their decline in 2021 is more pronounced (–6.1% versus –4.2% on average).31 In contrast, rents at the upper end of the distribution (75th percentile) grew more vigorously in 2019 (6.5%) and their decline in terms of the provincial average has been more limited in 2021 (–4.1%).32 This can be seen in the chart below, which shows the average annual change at a provincial level (the results at a municipal level are similar). These results suggest that much of the adjustment in rental prices has occurred among the lowest rents, generally in dwellings occupied by low-income households which have been the most affected by the crisis in terms of job losses and reduced income.
The pandemic hit international tourism hard, in turn having a direct impact on rental prices in the most tourist-oriented locations: properties that had been destined for tourist rental were shifted to the traditional residential market, increasing the supply and therefore pushing down prices. After classifying the municipalities into tourist and non-tourist (depending on whether spending via foreign cards at CaixaBank POS terminals was more or less than 10% of the total in 2019), we can see that the average rental price fell more sharply in 2020 in tourist-oriented municipalities and that this decline was more pronounced for high rents (75th percentile). We can also see that rental prices in non-tourist municipalities have been slower to adjust (no annual average declines are observed until 2021) and the decline was less sharp than in tourist municipalities and concentrated in the lower part of the distribution (25th percentile).33
Rental prices have fallen more sharply in tourist-oriented municipalities, especially in the upper part of the distribution
The COVID-19 crisis has accentuated and extended the price adjustment which the rental market was already experiencing before the pandemic arrived. In this context, the draft bill for the right to housing presented by the Spanish government in October 2021 introduces a new regulatory instrument so that regional governments and municipal councils can declare highrent zones in order to limit rental prices in these areas. International experience stresses the importance of carefully assessing the effectiveness and impact of such measures since, in certain cases, they can be counterproductive.34
Tras el intenso proceso de recuperación que experimentó el sector turístico el verano pasado, los indicadores de actividad turística publicados hasta el mes de diciembre no mostraban señal de agotamiento.
Tras el intenso proceso de recuperación que experimentó el sector turístico el verano pasado, los indicadores de actividad turística publicados hasta el mes de diciembre no mostraban señal de agotamiento. Tanto la demanda como la oferta y los precios mantenían el buen tono mostrado en verano e incluso siguieron mejorando en su camino de cerrar la brecha con el nivel pre-COVID. No obstante, esta buena tendencia tiene que volver a hacer frente a una nueva ola de contagios.
El escenario actual ha pasado a estar marcado por una enorme incertidumbre. La irrupción de la variante ómicron, el repunte de la presión hospitalaria y, a raíz de esto, la vuelta de algunas restricciones sobre la movilidad y el comercio apuntan a que el inicio de año será complejo. A pesar de ello, estimamos que, en esta ocasión, el shock será de menor intensidad y duración que en olas prevacuna, gracias a que contamos con soluciones con las que no disponíamos hace un año: la gran proporción de población vacunada, la gran capacidad de testeo y la campaña de vacunación de la tercera dosis. Así, en los próximos meses, prevemos una estabilización de la pandemia que debería permitir recuperar el nivel de movilidad doméstica y la senda de mejora de la movilidad internacional previos a la ola de COVID-19.
Nuestro escenario de previsiones de cara a 2022 se mantiene relativamente positivo. Esperamos que la situación de la pandemia registre una clara mejoría que permitirá recuperar el nivel de movilidad doméstica e internacional y reinstaurar las tendencias de mejora anteriores a la ola de COVID-19. Con todo ello, nuestras previsiones para el ejercicio 2022 son que el PIB turístico se situará en un nivel del 82% respecto al de 2019 –un registro similar al de 2016–, apuntando un crecimiento del 51% anual.
Además, consideramos que, este año, el papel de los fondos Next Generation EU (NGEU) también será importante ya no solo para aupar el crecimiento, sino para apuntalar el potencial de crecimiento del sector a largo plazo, sufragando inversiones en digitalización, sostenibilidad y mejora de infraestructuras, que en la actualidad son difícilmente asumibles por una industria turística muy dañada. En este informe, analizamos con detalle la situación de la sostenibilidad y de la digitalización del sector turístico, para entender el potencial de crecimiento que pueden ofrecer una mejora en ambas dimensiones y, por ende, el impacto que pueden tener los NGEU en el sector.
En conclusión, la nueva ola de COVID-19 nos ha llevado a que el inicio de año sea más complejo y también ha intensificado los riesgos a medio plazo. A pesar de ello, el conjunto de 2022 se sigue presentando como un año prometedor, con una previsión de crecimiento aún elevada, que aupará al promedio del sector a niveles de actividad rentables, y con una gran oportunidad en los NGEU para apuntalar la competitividad a más largo plazo.
A cierre del mes de noviembre, la mejora de la situación del sector turístico era palpable. Se consolidaron las buenas cifras del verano gracias a que se consiguió estirar la temporada en los meses de octubre y parte de noviembre. Esta buena tendencia se ha enturbiado con la irrupción de la nueva ola de COVID-19 en España, ligada a la variante ómicron. Sin embargo, una vez se estabilice dicha ola, cabe pensar que el sector volverá a la senda de la recuperación que venía registrando.
A cierre del mes de noviembre, la mejora de la situación del sector turístico era palpable. Se consolidaron las buenas cifras del verano gracias a que se consiguió estirar la temporada en los meses de octubre y parte de noviembre. Esta buena tendencia se ha enturbiado con la irrupción de la nueva ola de COVID-19 en España, ligada a la variante ómicron. Este contexto plantea dudas sobre la estabilidad del sector turístico para los próximos meses, que podría ver cómo el inicio de 2022 vuelve a ser negativo. Sin embargo, una vez se estabilice dicha ola, cabe pensar que el sector volverá a la senda de la recuperación que venía registrando hasta el pasado mes de noviembre. De cara al conjunto del año 2022, nos mantenemos optimistas y esperamos que se mejoren apreciablemente las cifras de 2021, a pesar de la elevada incertidumbre que se mantiene hoy en día.
Tras el intenso proceso de recuperación que experimentó el sector turístico el verano pasado, los indicadores de actividad publicados hasta el mes de diciembre no mostraban señal de agotamiento. Tanto la demanda como la oferta y los precios mantenían el buen tono mostrado en verano, e incluso siguieron mejorando en su camino de cerrar la brecha con el nivel pre-COVID. Esto, teniendo en cuenta que los riesgos ligados a la evolución de la pandemia volvieron a emerger a mediados de noviembre, cuando se iniciaron los repuntes de contagios en Europa y se expandió la nueva variante ómicron. A pesar de ello, la demanda turística se mantuvo muy sólida, consolidando semana a semana la gran mejoría alcanzada a mediados del año 2021.
Según los datos de las encuestas de ocupación hotelera y de establecimientos no hoteleros del INE, la senda de recuperación se agudizó en el mes de octubre. Las pernoctaciones totales se situaron un 18% por debajo del mismo mes de 2019, mejorando en 4 p. p. el buen registro de agosto. Las pernoctaciones de turistas internacionales se situaron un 32% por debajo de octubre de 2019 (17 p. p. mejor que en agosto), gracias a una recuperación muy intensa de la llegada de turistas británicos, que se situó en niveles superiores a los vistos en el mes de agosto. Por su parte, las pernoctaciones de turistas domésticos sorprendieron de forma considerable al registrar un nivel un 18% por encima del de octubre de 2019. Esta dinámica apoya la hipótesis de que la demanda embalsada y cautiva1 siguió teniendo un efecto importante sobre el turismo doméstico, y que los esfuerzos por alargar la temporada por parte del sector tuvieron sus frutos.
que la recuperación del sector turístico se aceleró en octubre gracias a un alargamiento de la temporada
El «estiramiento» de la temporada turística tuvo un claro efecto en octubre, pero según los datos de gasto con tarjetas en TPV de CaixaBank de comercios hoteleros no parece que este efecto se mantuviese en noviembre. Tal y como se puede observar en el gráfico de la página siguiente, la caída estacional del gasto entre mediados de agosto y la última semana de octubre fue menos intensa que en 2019, acercando apreciablemente el gasto semanal de 2021 al de 2019. No obstante, desde la primera semana de noviembre se observó una corrección de este efecto, lo que ha vuelto a colocar el gasto de 2021 en una estacionalidad más similar, aunque algo menor, a la de 2019.
Más allá del análisis del turismo vacacional y de ocio, muy dominador durante la temporada alta, es también relevante analizar la situación del turismo de negocios, muy importante para mantener viva la actividad turística en los meses invernales y clave para los destinos turísticos urbanos. Este tipo de turismo no es un pilar principal para el sector, pero se trata de un foco de ingresos bastante importante que generó el 8,2% del gasto turístico total en 2019, con aportaciones muy similares a las del turismo de negocios doméstico (de estancias más cortas) y el internacional (más enfocado a grandes ferias).
Tal y como se muestra en el gráfico doble siguiente, antes de que se iniciara la gran recuperación en mayo de 2021, el turismo de negocios se comportó relativamente mejor al turismo de ocio, tanto para internacionales como para domésticos. No obstante, el número de turistas domésticos que viajan por negocios se ha mantenido estancado en un nivel en torno a un 30% menor que el del mismo periodo de 2019. Los turistas internacionales que viajan por negocios sí que se recuperaron desde mayo de 2021, pero a una velocidad menor a la del turismo de ocio, dando señales de estancamiento en los últimos meses.
Este estancamiento podría deberse al impacto de la transformación digital vivida durante la pandemia, que ha llevado a que las interacciones laborales dependan mucho menos de la presencialidad, sobre todo en reuniones (más relevantes para el turismo doméstico). Esto podría suponer que el potencial de mejora del turismo de negocio sea menor en un contexto de normalización de la movilidad.
Dada la naturaleza cambiante e incierta de la coyuntura actual, cada vez gana más relevancia el poder efectuar un análisis con grandes bases de datos que proveen información mucho más rica. Por ello, en CaixaBank Research estudiamos los pagos con tarjeta en terminales de puntos de venta (TPV) de CaixaBank utilizando metodología big data, con el fin de elaborar indicadores de gasto turístico de gran granularidad.
Si nos detenemos a observar el indicador de consumo de tarjetas en TPV de CaixaBank por rama de actividad, actualizado hasta la última semana de noviembre (véase el gráfico de la página siguiente), observamos que las diferencias entre sectores en el proceso de recuperación lo moderaron. En concreto, los sectores de la parte de la cadena de valor más cercana al consumo en destino vieron cómo el efecto de la demanda embalsada se disipó parcialmente, mientras que los sectores intermedios (transporte y comercialización) vieron cómo mejoraban sus condiciones poco a poco.
apunta a que las diferencias entre sectores en la recuperación del turismo se comenzaron a disipar en la segunda mitad de 2021
Por un lado, la situación del sector de agencias de viajes y transporte de viajeros, que arrastraban una situación negativa el pasado verano, mantuvieron una mejora gradual hasta situarse, en la última semana de noviembre, un 39% y un 29% por debajo del mismo periodo de 2019, respectivamente (véase el gráfico). Otros sectores que despuntaron más en agosto de 2021, como alojamientos y alquiler de vehículos, moderaron sus repuntes, acercando su situación a la del promedio. Por su parte, el indicador de consumo de tarjetas en comercios de restauración mantuvo crecimientos muy elevados de facturación a cierre de noviembre, apuntando a una buena situación del sector, pero también al mayor uso de las tarjetas en este tipo de comercios tras la irrupción de la COVID-19.2
La dispar recuperación del sector hotelero en verano
El sector alcanzó una recuperación muy fuerte en los meses de verano de 2021, no obstante, la recuperación no ha sido igual para todos, algo que se observa rápidamente al analizar la recuperación de las pernoctaciones turísticas en las distintas comunidades autónomas (CC. AA.), que registraron desde caídas de más del 40% con respecto al verano de 2019 hasta crecimientos de casi el 10%.
Para entender mejor la desigualdad en la recuperación entre las empresas hoteleras, recurrimos a analizar la recuperación en la facturación en todos los comercios hoteleros con TPV de CaixaBank, lo que nos permite ver cómo se ha distribuido la mejora del gasto turístico.
Tal y como se observa en las tablas a continuación, la recuperación agregada del sector no ha sido del todo representativa, presentando grandes diferencias entre el 25% de hoteles con mejor y con peor comportamiento. Según nuestro análisis, la variación mediana en la facturación en TPV de hoteles en verano de 2021 con respecto al mismo periodo de 2019 fue del –16%. No obstante, más del 25% de los hoteles con TPV de CaixaBank mantuvieron caídas de más del 52% el pasado verano, mientras que el 25% de hoteles con mejor comportamiento alcanzó crecimientos de más del 19%.3
Estas diferencias se mantienen incluso cuando tenemos en cuenta la dependencia del turismo extranjero, el tamaño y la CC. AA. donde se localiza el hotel (véanse las tablas), lo cual corrobora que existe una enorme desigualdad dentro del sector y que, debido a esta, aún hay un gran número de hoteles que están atravesando una situación complicada. Las herramientas de política económica deberían seguir teniendo en cuenta esta desigualdad y mantener mecanismos de apoyo para las empresas en dificultades.
Si bien la lectura de los indicadores de actividad turística en España es muy positiva hasta diciembre, la irrupción de la nueva variante ómicron ha cambiado de forma considerable las perspectivas a corto plazo. La escalada de restricciones para contener esta nueva ola empeorará las cifras de actividad para el inicio de 2022, si bien aún existe mucha incertidumbre sobre la magnitud del shock, puesto que esta vez las herramientas que tenemos a nuestra disposición para combatir el avance de la pandemia ya no solo se basan en la movilidad, sino que también se apoyan en la vacuna, en la capacidad de testeo y en la campaña de la dosis de refuerzo.
En este sentido, podemos aprender de la situación vivida por los países del norte de Europa durante el mes de diciembre, cuando ya estaban inmersos en la ola de COVID-19 y tuvieron que tomar medidas de restricción. Para ello, analizamos los datos de alta frecuencia de vuelos que ofrece Eurocontrol, que suman las operaciones domésticas e internacionales y que ayudan a aproximar el movimiento de turistas en otros países de nuestro entorno. Tal y como se recoge en el gráfico de la página siguiente, la movilidad aérea en los países afectados más tempranamente por la nueva ola no sufrieron un impacto demasiado intenso en la movilidad aérea durante el mes de diciembre. Solo Austria, donde se impusieron restricciones más severas, vio cómo el número de vuelos se alejó de la referencia pre-COVID, con una caída del 42% con respecto a diciembre de 2019 (–35% en noviembre). Por su parte, la movilidad aérea en los destinos turísticos del sur de Europa, menos afectados por la ola en el conjunto del mes, alcanzó cotas entre un 20% y un 15% menores a las del mismo periodo de 2019, mejorando los registros de noviembre.
Este análisis de las experiencias vividas en otros países europeos nos ayuda a prever que el impacto de esta nueva variante no debería ser tan elevado el de olas previas a la vacuna, a pesar de que esperamos que sea elevado.
El escenario actual viene marcado por una gran incertidumbre. El análisis de todos los indicadores, oficiales, internos y de alta frecuencia, nos otorga una señal muy positiva, incluso durante el mes de diciembre. No obstante, la situación de la pandemia se ha recrudecido de forma muy destacada y, con ella, la actual escalada de restricciones supondrá un bache importante en la recuperación, al menos durante enero y febrero, e intensifican los riesgos a medio plazo.
Para construir nuestro escenario de previsiones, asumimos que, el mes de enero y febrero estarán apreciablemente afectados por las restricciones. A pesar de ello, el impacto de estas debería de ser mucho menor al de olas previas, gracias a que, además de las restricciones, contamos con soluciones médicas con las que no disponíamos hace un año. En concreto, la gran proporción de población vacunada, que tiene un efecto muy claro sobre la probabilidad de desarrollar casos severos, la gran capacidad de testeo y la campaña de vacunación de la tercera dosis.4 Así, a medio plazo, prevemos una estabilización de la pandemia que debería permitir recuperar el nivel de movilidad doméstica y la senda de mejora de la movilidad internacional previos a la reciente ola de COVID-19.
En este contexto de lecturas mixtas, estimamos que el año 2021 cerró con un nivel de PIB del 55% de 2019, lo que mejoró en un 58% el registro del 2020, gracias a la inercia positiva del turismo internacional y doméstico observada en el análisis de los indicadores disponibles.
De cara a 2022, esperamos que el difícil inicio del año no marque los registros del conjunto del ejercicio. Así, prevemos que el gasto de los turistas internacionales crezca un 92% y se sitúe alrededor del 70% del nivel de gasto observado en 2019. En este escenario, contemplamos un inicio de año complejo debido a la nueva oleada, pero asumimos que el impacto será temporal y que el sector volverá a la senda del crecimiento, apoyado, en gran medida, por la recuperación de la movilidad del turismo de la UE y británico, que mostró tendencias muy positivas hasta diciembre de 2021. En lo que respecta al turismo doméstico, esperamos que el impacto de las restricciones sea de menor intensidad y que, durante la temporada alta, el efecto de demanda cautiva continúe manteniendo el gasto de los turistas españoles en niveles similares a los de 2019, llevando al gasto turístico doméstico anual a situarse ya por encima del nivel prepandémico.
a pesar del complejo inicio de año a raíz de la pandemia: prevemos que el PIB turístico se recuperará con fuerza y crecerá un 51% en 2022
En lo que respecta al nivel de PIB turístico a 2022, las cifras esperadas para el conjunto del año se mantienen positivas a pesar de las dificultades del 1T. La estabilización de la pandemia durante la temporada de primavera y la recuperación del dinamismo en los meses de verano auparán el PIB turístico a un nivel del 82% respecto al de 2019, con un crecimiento del 51% anual. Si bien las cifras de PIB turístico que esperamos para 2022 serán muy positivas para el sector (se situará en un nivel similar al de 2016), aún esperamos un gap apreciable con el nivel de 2019. Esto se deberá, más allá de al difícil inicio del año, a que no esperamos que el turismo de largo rango y de mercados menos tradicionales se recupere a gran velocidad este año.
Con estas perspectivas, esperamos que el ejercicio 2022 sea rentable para el promedio del sector, lo cual reafirma que la sostenibilidad de la industria turística a largo plazo está fuera de dudas. A pesar de ello, es importante apuntar que la política económica deberá continuar adaptándose de manera efectiva, debido a que la pandemia sigue ejerciendo presión sobre el conjunto del sector turístico y a que aún quedan empresas turísticas que arrastran grandes dificultades. En este sentido, consideramos clave la extensión de los ERTE a raíz de una coyuntura más compleja debido al endurecimiento de la pandemia. Adicionalmente, el Fondo de Apoyo a la Solvencia de Empresas Estratégicas gestionado por la SEPI, dotado de 10.000 millones de euros de los que ya se han concedido ayudas por importe de 1.080 millones de euros, continúa siendo muy importante para la estabilidad de empresas turísticas claves.
Para finalizar, aunque no menos importante, el papel de los fondos NGEU también será significativo a la hora de sufragar inversiones en digitalización, sostenibilidad y mejora de infraestructuras, que en la actualidad son difícilmente asumibles por una industria turística muy dañada.5 En concreto, las líneas de actuación para la inversión de los fondos NGEU en el sector turístico están detalladas en el Plan de Modernización y Competitividad del Sector Turístico del Plan de Recuperación, Transformación y Resiliencia. En este plan, se han presupuestado inversiones de 3.400 millones de euros en tres años, entre las que destacamos los 1.900 millones de euros en inversiones para fomentar la sostenibilidad del sector y los 337 millones de euros de inversión en digitalización. Si bien las cantidades pueden ser algo limitadas para un sector tan amplio, que antes de la pandemia pesaba un 12,4% del PIB (154.000 millones de euros de PIB), se trata de un plan de acción que va en la dirección adecuada y que incentivará a que la iniciativa privada tome las riendas y apueste de nuevo por la transformación para salir de esta crisis manteniendo nuestro estatus como destino turístico más competitivo del mundo.
Una de las consecuencias del estallido de la crisis sanitaria por la COVID-19 ha sido la mayor concienciación de la población y, por extensión, de la clase política, sobre la necesidad de introducir criterios de sostenibilidad en las políticas económicas, con el fin de impulsar una reactivación de la economía de forma más sostenible y resiliente. El sector turístico no es ajeno a estas tendencias porque, en primer lugar, su propia actividad se puede ver perjudicada por las consecuencias del cambio climático y, en segundo lugar, existe un amplio margen para que la actividad turística sea más sostenible. Este artículo trata de responder qué entendemos por sostenibilidad en el sector turístico, cómo se puede medir, en qué punto se encuentra el sector turístico español y hacia dónde se dirige.
El sector turístico español ha experimentado en los últimos años un desarrollo excepcional, hasta convertirse en una de las principales fuentes de actividad, renta y empleo para la economía española. Este fuerte desarrollo desencadenó, de forma paralela, la aparición de algunas conductas críticas y de rechazo social al papel del turismo en ciertos destinos y momentos del tiempo, hasta que, en 2020, la crisis del coronavirus paralizó la actividad del sector y puso sobre la mesa su relevancia en el sistema económico y social en muchos territorios españoles. En la actualidad, las políticas puestas en marcha por las autoridades europeas y por el propio Gobierno español apuntan claramente hacia una salida de la crisis bajo criterios de sostenibilidad y de resiliencia que, en el caso del sector turístico, adquiere una doble vertiente. Por un lado, la actividad turística es especialmente sensible a los efectos del cambio climático, tales como el aumento en el nivel del mar, los fenómenos climáticos extremos, la degradación medioambiental o la pérdida de biodiversidad. Por el otro, existe un amplio margen de mejora para que el sector turístico sea más sostenible, al tratarse de una actividad que comporta elevados niveles de contaminación de la atmósfera y de fuerte presión sobre los recursos naturales.
los principios de sostenibilidad en función de los aspectos medioambiental, económico y sociocultural del desarrollo turístico
A este respecto, la Organización Mundial del Turismo (OMT) define los principios de sostenibilidad en función de tres ámbitos: medioambiental, económico y sociocultural. El primero persigue dar un uso óptimo a los recursos naturales y medioambientales, así como a preservar la diversidad biológica. El aspecto económico corresponde al impacto de la actividad turística sobre la economía de la localidad receptora de turismo, de tal manera que se promuevan actividades viables a largo plazo, con oportunidades de empleo estable y la obtención de unos beneficios socioeconómicos bien repartidos. Por último, el ámbito sociocultural persigue conservar y fortalecer los activos culturales y arquitectónicos y los valores tradicionales del destino turístico.
Al tener en cuenta los tres aspectos que la OMT define sobre la sostenibilidad del sector turístico, tratamos de establecer un indicador relevante para cada uno de ellos con el fin de medir en qué punto se encuentra la sostenibilidad en el sector y cuáles deberían ser los pasos a seguir a partir de ahora. Cabe señalar que nuestro análisis se realiza con datos anteriores a 2020, ya que el efecto de la pandemia sobre estos indicadores distorsionaría el análisis que se pretende para este artículo.
por parte del sector turístico se concentra en los sectores del transporte
En el ámbito medioambiental, se emplea la evolución de las emisiones de gases de efecto invernadero (GEI) hacia la atmósfera por parte de los sectores que aglutina la industria turística española.6 Para analizar el sector solo tenemos en cuenta la evolución de los tres gases que más expulsa a la atmósfera: dióxido de carbono (CO2), óxidos de nitrógeno (NOx) y monóxido de carbono (CO). La primera conclusión que se puede extraer es que la mayor parte de la emisión de GEI procede de los sectores del transporte (suponen en torno al 12% del PIB turístico), concretamente a la emisión de óxidos de nitrógeno, derivada de la combustión de los motores. Estos sectores se encuentran entre los más contaminantes del conjunto de las ramas de actividad. Además, sus niveles de contaminación han aumentado desde 2013 para el caso del transporte aéreo, mientras que, para el transporte terrestre han disminuido, pero se mantienen en niveles tremendamente elevados. Respecto a los servicios de alojamiento y restauración, y las actividades de agencias de viajes y turoperadores, el monóxido de carbono es el gas contaminante que más se expulsa a la atmósfera.7 Aunque los niveles de contaminación no son alarmantes, lejos de moderarse, mostraron un crecimiento del 78% en el caso del alojamiento y del 38% en el caso de agencias y turoperación entre 2013 y 2019.
Los indicadores de valor económico consideran la contribución del turismo a la sostenibilidad económica de cada destino. Para medir este ámbito consideramos como variables el número medio de pernoctaciones al mes (volumen de actividad) y el gasto por turista (valor de esa actividad). El volumen y el valor del turismo son esenciales para la sostenibilidad económica de un destino: cuanto más elevado sea el gasto por día, más eficiente será el destino en la generación de valor turístico.
La relación entre el volumen (número de pernoctaciones) y el gasto por turista puede verse en el siguiente gráfico.8 Entre las provincias más turísticas (aquellas con más de 10 millones de pernoctaciones al año), el gasto medio se sitúa en torno a los 300 euros por turista. Entre ellas destaca negativamente el caso de Las Palmas: la segunda provincia con más pernoctaciones, pero con un gasto promedio modesto. Entre el resto de provincias, el gasto medio por turista se sitúa por debajo de los 175 euros. En este caso, destacan de forma muy positiva, entre otras, Girona, Alicante o Guipúzcoa, que se caracterizan por un volumen más modesto de estancias hoteleras pero que disfrutan de un gasto por turista muy elevado.
Como indicador básico para medir el impacto social y cultural de los diferentes destinos turísticos, medimos la congestión en las distintas provincias, ya que influye en la satisfacción de los residentes y es un indicador básico del impacto social del turismo en una comunidad. Para ello, utilizamos la variable del número de pernoctaciones en proporción a la población residente, cuyos resultados se pueden observar de forma resumida en el siguiente mapa. En términos generales, no se observa una presión turística relevante en la mayor parte del territorio.9 Sin embargo, son llamativos los casos de (i) las regiones insulares, destino eminentemente de playa y naturaleza, que reciben mucho turismo internacional;10 (ii) ciertas zonas cercanas a la frontera con Francia, con un modelo turístico de playa y montaña (Huesca, Tarragona y Girona) que tienen una población local reducida y que reciben la visita de países vecinos, así como (iii) ciertas localidades de Andalucía, que reciben tanto turismo nacional como internacional (Málaga, Huelva y Almería). Evidentemente, la congestión de los destinos más turísticos no ha hecho más que empeorar en los últimos años, teniendo en cuenta que la población ha crecido, por término medio, mucho menos que la llegada de turistas.11
A la luz de los indicadores disponibles, parece claro que existe margen de mejora en los próximos años. En el ámbito medioambiental, los niveles de contaminación incluso han aumentado en los últimos años, y las líneas de mejora van desde la promoción de construcciones más eficientes y con mayor calidad energética, pasando por sistemas de acondicionamiento más modernos, hasta la promoción de medios de movilidad más sostenibles, entre otros aspectos. En términos económicos, no cabe duda de la importancia del sector para el conjunto de la economía española, si bien habrá que vigilar aquellos destinos especialmente demandados, con elevados niveles de congestión, donde la aportación económica del sector es modesta. Por último, en términos socioculturales, existen algunas regiones con una sobredemanda turística creciente que provoca malestar en determinadas poblaciones residentes, ya que causa problemas de congestión en localidades pequeñas, con servicios públicos limitados y que no siempre están preparadas para absorber esa ingente demanda estacional.
A partir de aquí, la agenda hacia la sostenibilidad en el sector pasa por retomar iniciativas anteriores a la COVID-19 y que permitan, ahora, aprovechar los fondos procedentes de Europa.12 En concreto, el sector turístico español aparece en el Plan de Recuperación, Transformación y Resiliencia del Gobierno a través de la política de «Modernización y digitalización del tejido industrial y de la Pyme, recuperación del turismo e impulso a una España Nación Emprendedora», donde el componente 14 traza un Plan de Modernización y Competitividad del Sector Turístico. Dentro de este último, el eje que más inversión recibirá es la Estrategia de Sostenibilidad Turística en Destinos, que cuenta con un presupuesto estimado de unos 1.900 millones de euros para los próximos tres años.13
la competitividad del sector turístico español a través de un nuevo modelo de mayor valor añadido
Entre los objetivos de estas iniciativas no solo se encuentra que los destinos españoles sean capaces de integrar en su oferta criterios de sostenibilidad medioambiental, socioeconómica y territorial, sino también desarrollar estrategias de resiliencia frente a los retos actuales (cambio climático, sobredemanda turística, crisis sanitarias y de seguridad) y alcanzar una mayor cohesión territorial. Es decir, promover un mejor reparto de las cargas sobre el territorio y consolidar una gestión territorial integral que ayude a frenar los procesos de despoblación. El objetivo final no es otro que tratar de mejorar la competitividad del sector turístico español a través de un nuevo modelo que sea más sostenible, de más calidad y, por tanto, de mayor valor añadido.
Los sectores más relacionados con el turismo se están digitalizando más rápido que el promedio de la economía española, pero el recorrido todavía es amplio, especialmente si lo comparamos con otros sectores turísticos europeos. En los próximos años, será clave que el sector turístico sea capaz de remediar esta situación, mediante una apuesta clara por la digitalización, que contribuya a mejorar su capacidad de crecimiento a largo plazo. El papel de los fondos europeos NGEU se presenta como una oportunidad de reactivar la inversión en digitalización de las empresas turísticas tras superar dos años muy difíciles para el sector.
A raíz de la pandemia, la digitalización ha ganado aún más protagonismo en nuestras vidas. Los consumidores hemos cambiado radicalmente nuestra manera de comunicarnos, de trabajar y de consumir. Por su parte, el tejido empresarial se ha adaptado muy rápidamente a estos cambios, acelerando sus procesos de digitalización con la implantación masiva del teletrabajo y el enorme crecimiento de las ventas e-commerce.14 Este proceso de transformación es muy necesario para asegurar el crecimiento a largo plazo de todos los sectores. Las empresas que apuesten por la digitalización en los próximos años estarán apostando por una estrategia que les hará ganar productividad y competitividad y, por ende, estarán mejorando sus perspectivas muy significativamente, mientras que aquellas que se queden atrás pueden perder protagonismo en los próximos años.
Ha habido sectores, como el comercio minorista, que han logrado grandes avances durante la pandemia, mediante una incorporación sin precedentes de la digitalización en sus canales de venta. El sector turístico no ha sido ajeno a esta dinámica, si bien, a causa de los problemas económicos que ha atravesado durante la pandemia, no ha podido avanzar de manera tan destacable. Sin embargo, la recuperación económica del sector y la llegada de los fondos Next Generation EU (NGEU) podrían suponer un revulsivo para que el sector se vuelque en continuar avanzando hacia la digitalización.
Para entender los próximos pasos de la industria turística en materia de digitalización es necesario entender el estado de la cuestión en las empresas del sector. Para poder medir la situación del proceso de digitalización en las empresas turísticas utilizamos el Índice CaixaBank de Digitalización Sectorial (ICDS). Nuestro índice ofrece una visión holística del proceso de digitalización empresarial, y permite identificar las fortalezas y debilidades de los distintos sectores de actividad en diversos ámbitos: activos digitales (capital y recursos humanos); profundidad digital de las interacciones con clientes, proveedores y Administraciones públicas, y de la intensidad de uso de tecnologías digitales tradicionales y emergentes.15
Tal y como se muestra a continuación, según los resultados que arroja el ICDS para el 2020, el sector de referencia en España es el de tecnologías de la información y de las comunicaciones (TIC), con un registro de 67 puntos sobre 100.16 Por su parte, comercio, alojamiento y transporte y almacenamiento (los tres sectores más ligados al turismo analizados en el índice) muestran registros de 48, 46 y 42 puntos, respectivamente, lo que implica una brecha importante con respecto a sectores más digitales. Cabe señalar que, a pesar de que ninguno de estos tres sectores más ligados al turismo destaca significativamente, la evolución entre 2017 (primer año calculado) y 2020 ha sido más positiva que en el promedio, lo que apunta a que el sector turístico está mejorando su posición relativa.
más rápido que el promedio de la economía española, según apunta el Índice CaixaBank de Digitalización Sectorial
El ICDS nos posibilita efectuar un análisis más fino, gracias a que está compuesto por diversos pilares y subpilares que ilustran el nivel de digitalización en campos más concretos. En este sentido, si analizamos los pilares de digitalización de inputs y de interacciones (véase la tabla), observamos que las empresas del sector turístico sí destacan en ámbitos concretos. Así, vemos que el sector de alojamiento es una referencia en el grado de digitalización de su relación con clientes, gracias al proceso de digitalización de la comercialización de los servicios, que lleva ganando terreno a otros métodos de comercialización tradicional desde hace muchos años. Por el contrario, se evidencian muchos ámbitos que necesitan mejorar, como es la digitalización en la relación con proveedores y la banca, así como la digitalización de los factores de producción (capital y trabajo).
De este análisis emerge la cuestión de hasta qué punto es necesario que la digitalización del sector turístico avance en la misma medida que un sector como el de las TIC. Las características idiosincráticas de cada sector pueden dictar que la digitalización del capital y del trabajo óptimas pueden variar mucho entre sectores. Para entender mejor la brecha con la frontera tecnológica de cada sector relacionado con el turismo, analizamos a nivel internacional cuál es el grado de digitalización de los factores de producción, concretamente, comparando el grado de utilización de tecnologías digitales avanzadas en los países de la UE para el sector alojamiento y el de comercio.
Tal y como se muestra en los gráficos siguientes, la utilización de tecnologías de big data y de computación en la nube por parte de los sectores de alojamiento y comercio españoles se sitúan por debajo de la media de la UE. Además, presentan una brecha con respecto a la frontera tecnológica (diferencia con respecto al país europeo más digitalizado) muy amplio en todos los casos, lo que evidencia que existe un gran margen de mejora en las empresas relacionadas con el turismo en España.
de su relación con los clientes, gracias al proceso de digitalización de la comercialización de los servicios
Una vez analizadas las fortalezas y debilidades del proceso de digitalización en el sector turístico, es importante entender qué puede ofrecerles a las empresas, puesto que la digitalización no es un fin, sino un medio para alcanzar una mayor competitividad y productividad. En el ámbito turístico se pueden extraer lecciones de lo que ha ganado el propio sector gracias a la digitalización de la interacción con sus clientes, que según el ICDS ha alcanzado un nivel muy elevado, principalmente a raíz de la aparición de las OTA (agencias de viajes on-line, como Booking o Expedia) y del desarrollo de la venta directa
on-line efectuada por las grandes cadenas hoteleras.
Según un estudio de Phocuswright, entre 2014 y 2019, la facturación por venta de habitaciones de hotel en la UE efectuada por canales electrónicos mostró un enorme dinamismo y creció a un ritmo anual promedio del 8,1%, en especial a través de las OTA, cuyas ventas crecieron a un ritmo del 11% anual. Esto contrasta con la evolución más pobre de los canales de venta tradicionales (directa presencial, agencias de viajes físicas y turoperadores), que apenas creció a un ritmo del 0,8% anual. Así, el peso de la venta on-line en la UE en 2019 alcanzó un 40% (27% OTA y 13% venta directa on-line), lo que indica que estos canales de venta se están mostrando mucho más competitivos que los tradicionales a ojos del turista. Estas tendencias se hacen aún evidentes si solo analizamos las pymes hoteleras, que entre 2016 y 2019 solo registraron crecimiento en sus canales de venta no presenciales.
creció a un ritmo promedio anual del 8,1%, muy superior al ritmo del 0,8% de la venta por canales tradicionales
Para la oferta, la apuesta por los canales de venta on-line ha supuesto un modelo de éxito, al ofrecer una visibilidad y un acceso a un mercado mucho mayores, para todo tipo de destinos y hoteles, sin importar la cantidad de recursos disponibles para invertir en marketing. En otras palabras, los canales de venta digitales hacen posible que un pequeño hotel de un municipio no eminentemente turístico de España pueda vender reservas a un turista de cualquier continente del mundo. Si analizamos los pagos en TPV de CaixaBank en comercios hoteleros entre 2019 y 2021, observamos que la probabilidad de que un extranjero haga una compra en un comercio hotelero es apreciablemente mayor a través del canal e-commerce, incluso en 2020, cuando el volumen de turistas extranjeros en España fue un 79% menor que en 2019, aunque efectuaron el 63% del gasto en hoteles por canales on-line.
La digitalización de la venta de servicios turísticos ya está relativamente avanzada y confirma el enorme potencial que esconde la digitalización en términos de mejoras de competitividad y productividad. No obstante, según los resultados del ICDS analizados en este artículo, existen otros ámbitos que aún presentan un margen de mejora muy elevado (relaciones B2B, inversión en capital tecnológico, mayor uso de analítica de datos, etc.) que podrían ser clave para el futuro del sector. Para avanzar en la digitalización de estos puntos débiles, será necesario que las empresas del sector inviertan definitivamente en la digitalización.
los efectuara un turista internacional fue mayor en los canales de venta e-commerce
En este proceso, no saldrán ganando todos los actores del sector turístico. Los sectores tradicionales con menos capacidad de digitalizarse podrían perder peso, dejando espacio para aquellas empresas que sí desarrollen sus canales digitales. Según nuestro análisis, los principales ganadores de la digitalización podrían serán: (i) las empresas turísticas de menor tamaño, con más potencial de mejora de eficiencia que las grandes empresas; (ii) las empresas que ofrezcan servicios diferenciados, en un contexto en el que la venta on-line provee abundantes opciones para el comprador, y (iii) los turistas, que tendrán acceso a más cantidad de servicios, más personalizados y a precios más competitivos.
Como se ha apuntado anteriormente en este artículo, el desarrollo de la digitalización requiere de inversiones importantes. No obstante, la crisis producida por la pandemia ha limitado considerablemente la capacidad de inversión de las empresas turísticas. En este contexto, el papel de los fondos europeos NGEU a través del Plan de Recuperación, Transformación y Resiliencia (PRTR) podría ser clave. El sector turístico español aparece en el PRTR a través de la política de «Modernización y digitalización del tejido industrial y de la pyme, recuperación del turismo e impulso a una España Nación Emprendedora», donde el componente 14 traza un Plan de Modernización y Competitividad del Sector Turístico. A pesar de ello, la partida presupuestada para la digitalización del sector turístico dentro del componente 14 del plan es de tan solo de 337 millones de euros, algo que se antoja muy limitado dada la magnitud del sector turístico, que en 2019 alcanzó un PIB turístico de 154.000 millones de euros (la inversión en digitalización sería del 0,2% del PIB turístico de 2019).
son limitados, pero podrían suponer una palanca de reactivación para la inversión privada en digitalización
Los objetivos del Plan de Transformación Digital del sector turístico del PRTR se han enfocado en el desarrollo de plataformas digitales que añadan valor o que supongan una palanca de crecimiento para el sector. Así, las tres principales líneas de actuación serán:
En conclusión, las líneas definidas por el plan son muy acertadas dadas las debilidades identificadas en este artículo en el proceso de digitalización del sector turístico. Aunque estimamos que el tamaño de los recursos asignados en el PRTR para estas iniciativas es pequeño, sí prevemos que tenga un efecto palanca para reactivar iniciativas privadas de inversión en digitalización que se dejaron a un lado tras la irrupción de la COVID-19. Sea como fuere, el sector turístico deberá retomar el camino previo a la pandemia, volviendo a invertir con fuerza en su transformación, y especialmente en su transformación digital.
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.