Catalan economy drops 3.9% on last year due to coronavirus crisis

The coronavirus crisis is taking its toll on the economy. A 3.9% drop in Catalonia’s GDP was seen in the last trimester compared to the previous year, according to new figures released by Catalonia’s Institute of Statistics (Idescat).

Compared with the previous quarter at the end of 2019, the decline in the Catalan economy was 4.6%.

This is the largest quarter-on-quarter rate reduction since 2000, while in year-on-year terms it sits at the levels of the 2008 financial crisis when it deteriorated by more than 4%.

Catalonia’s Institute of Statistics recalls that at that time, higher quarterly activity losses were generated than at present.

Counting all of Spain, the first quarter of 2020 saw a 4.1% fall compared to the previous year, while across the European Union, a fall of 3.5% was recorded.

Meanwhile, Spain’s statistics institute (INE) estimated an even more severe drop in economic activity for the first quarter of 2020. Their numbers released at the end of April recorded a 5.2% plummet of Spain’s GDP.

INE also recorded a quarter-on-quarter drop of 4.1% for the first three months of this year. 

Unemployment and 2020 projection

The Catalan government estimates that GDP will fall 8.8% this year in the worst-case scenario, with the unemployment rate skyrocketing from 10% to 18%. 

The country's vice president and economy minister, Pere Aragonès, announced the estimations in late April, shortly after Spain’s statistics institute made their figures known. 

Even the less pessimistic estimates suggest that this year the Catalan economy will shrink by at least 7.6% and the unemployment rate go up to 17%.

However, the government also predicts a strong recovery next year, with GDP rising somewhere between 5.1% and 6.5%, with the jobless rate between 14.2% and 15.9%.