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Letter from... Madrid

17 August 2020

By Elena Gallego, Account Director, ACH (Part of SEC Newgate)

A terrible shadow of pessimism hangs over our country these days.

Not even the worst predictions augured the situation in which we now find ourselves: Spain is suffering its highest levels of infection since lockdown – exceeding 1,500 a day. These infection rates are similar to levels seen in the highest peak of the pandemic during the many months of confinement.

The figures are chilling: the coronavirus has left about 330,000 infected in Spain with nearly 29,000 deaths, according to the latest Ministry of Health data, and this is just data from one institution, there are other institutions with different numbers….astonishing!

It’s not just the health perspective which is bad but if we go deep into the economic outlook, the forecasts and the current scenario are even more dire. Nobody can doubt that the Spanish economy is sinking and is far behind the rest of the developed countries. Clearly the coronavirus has dealt a severe blow to the finances of our country, placing all economic indicators at levels never seen before.

According to the opinion of expert analysts, the drastic downward revision of GDP in 2020 is due to the prolongation of the containment measures which were maintained longer than expected. The restrictions also had an impact on domestic figures, due to the reduction in spending on goods and services produced within Spain and from the contraction of the tourism sector. As proof and just one example: over one million jobs were lost during the second quarter of the year.

And….how do the Spanish people feel about this situation?

The levels of anxiety are the highest recalled in facing an episode of uncertainty like the one we are experiencing.

There are concerns: that a new confinement would lead to the greatest economic ruin suffered since the Spanish Civil War; of the incessant outbreaks that we are not able to control and lead to an unprecedented health emergency; about political leaders and their disregard for the suffering of citizens and their strategy based on populist demagogy rather than what is best; and, in general, the Spanish people are convinced it will come to them to unite, rise up and resurface from this chaos, as has happened on other occasions.

And so, both in fortune and in adversity, is the situation Spain finds itself and feels. As Lord Wellington stated: "Spain is the only place in the world where 2 and 2 do not add up to 4".