The document summarizes economic forecasts from sources like the IMF and Eurostat regarding the impact of COVID-19 on economies like Spain and globally. It notes that Spain's public deficit is forecast to increase to 9.5% of GDP in 2020 due to economic contraction and increased welfare spending. Unemployment in Spain's hospitality industry could increase by 25% (350,000 jobs lost) with additional jobs at risk. The IMF forecasts a 3% contraction of global GDP in 2020 and a slower recovery in 2021, with advanced economies like Spain and Italy projected to see the largest downturns at -8% and -9.1% respectively.

1. Source: Círculo de Empresarios based on INE and Eurostat, 2020.
0
2
4
6
8
10
12
-150
-100
-50
0
50
100
150
200
2008 2010 2012 2014 2016 2018 2020
Volume % of GDP (right axis)
0
1
2
3
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
Eurozone Spain
-25
-20
-15
-10
-5
0
5
10
0
1
2
2008 2010 2012 2014 2016 2018 2020
Number of employees
YoY change (right axis)
Public deficit, Spain
In 2020, the IMF forecasts that Spain’s
public deficit will increase to 9.5% of GDP
(compared to 2.6% in 2019), against a
backdrop of GDP shrinking by 8% yearly.
On spending, an increase is expected as a
result of the measures approved by the
government to mitigate the impact of
COVID-19, and welfare benefits. Regarding
revenue, there will be a significant fall as a
result of the economic standstill. On the
other hand, public debt will increase to 113%
of GDP, 18pp higher than in 2019.
Forecasts for 2021, place the deficit at 6.5%
of GDP, and the debt at 115% of GDP, with a
rebound in growth of 4.3% yearly.
Hospitality industry, Spain
In 2019, the hospitality industry represented
6.2% of GDP and 8.7% of total employment
(around 1.7 million people); and its annual
turnover rose to €124 billion in 2018.
According to EY and Bain & Company, due
to the lockdown imposed to combat
COVID-19, in 2020, there could be
employment losses in the region of 25%
(350,000-360,000 jobs). At the same time,
680,000 additional jobs are at risk, and
turnover could fall by 40% (€49-€52
billion).
In light of this, VAT revenue from the sector
could decrease by between €4.9-€5.2
billion). At the same time, social spending
on unemployment benefits could increase
by €3.5 billion.
The need for sector financing, without
support measures for an increase in
liquidity, could increase by between €15-16
billion.
HICP, Spain
In March, the Harmonized Index of Con-
sumer Prices (HICP) continued its down-
ward trend, reaching 0.1% year-on-year,
1.2pp less than in March 2019. This is partly
explained by the decrease in the price of fuel,
electricity and package tours.
Since November 2018, inflation has been
below Eurozone levels, registering a
differential of 0.5pp in March.
Economy…
at a glance April 2020
Source: Círculo de Empresarios based on IMF, 2020.
HICP evolution
YoY change (%)
Hospitality industry’s employment, Spain
Million of jobs and YoY change (%)
Note: forecasts are based on the lockdown lasting until 30th May.
.Source: Círculo de Empresarios based on INE, EY and Bain & Company, 2020.
Public deficit evolution, Spain
€bn and % of GDP

2. ‘Economy at a glance’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains information and opinion from reliable sources. However, the
Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This document is merely informative. As a result, the Círculo de
Empresarios is not responsible for any uses that may be made of the publication. The opinions and estimates of the Department can be modified without prior warning.
www.circulodeempresarios.org
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-2
0
2
4
6
1980 1985 1990 1995 2000 2005 2010 2015 2020
IMF
Forecast
85
90
95
100
105
110
115
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
20202
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Advanced
economies
Emerging
economies
Previous forecast
Current forecast
Previous forecast
Current forecast
2020 2021 2020 2021
Advanced ec. -6.1 4.5 Emerging ec. -1.0 6.6
US -5.9 4.7 China 1.2 9.2
Eurozone -7.5 4.7 India 1.9 7.4
Germany -7.0 5.2 Russia -5.5 3.5
France -7.2 4.5 Brazil -5.3 2.9
Italy -9.1 4.8 Mexico -6.6 3.0
Spain -8.0 4.3 Saudi Arabia -2.3 2.9
Japan -5.2 3.0 Nigeria -3.4 2.4
UK -6.5 4.0 South Africa -5.8 4.0
-40
-30
-20
-10
0
10
20
30
40
50
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
Mar-19
Jul-19
Nov-19
Mar-20
Exports Imports
IMF growth forecasts
The IMF, in its spring forecast, projects a 3%
yearly contraction of global GDP as a result
of the impact of COVID-19. This forecast is
6.3pp lower than the one in January, when
the organization forecast a limited impact
from coronavirus in the region of 0.1 and 0.2
pp on world GDP growth.
In advanced economies, a greater fall in GDP
is forecast of 6.1% yearly, in contrast to the
1.6% increase forecasted in January. The
biggest downturns will take place in Italy
and Spain (-9.1% and -8% yearly,
respectively).
In emerging economies, the reduction in
growth perspectives has been smaller (-1%
compared to 4.4% in January). The biggest
setbacks will be in Mexico and South Africa
(-6.6% and -5.8% respectively). In contrast,
growth is forecast in India (1.9% yearly) and
China (1.2% yearly).
In light of this, it is forecasted that the
greatest impact will take place in the first
half of 2020. In 2021, increases in world GDP
will bounce back to 5.8% yearly, conditioned
by the future results of the efforts to contain
the spread of the pandemic.
Trade in goods, China
In March, the development Chinese foreign
trade of goods improved market
expectations, although it remained at low
levels.
Exports fell by 6.6% yearly (compared to
forecasts of -14%), to $185.15 billion (1.6% of
GDP). Imports fell by $0.9% (compared to
forecasts of -9.8%), to $165.25 billion (1.4%
of GDP). As a result of this, China registered
a trade surplus of $19.9 billion (0.2% of
GDP).
These figures show a certain relative im-
provement, but the future of Chinese trad-
ing will be conditioned by foreign market
developments, currently affected signifi-
cantly by COVID-19.
Foreign trade of goods, China
YoY change (%)
Source: Círculo de Empresarios based on China General Customs
Administration, 2020
, 2020.
Source: Círculo de Empresarios based on IMF, 2020.
GDP forecast current prices
Index Q1 2019 = 100
World GDP growth
YoY change (%)
GDP forecast
YoY change (%)