Tourist Bar and Restaurant Closures in Costa del Sol and Costa Blanca Badly Hurting Economy says Bank of Spain

TOURIST bar and restaurant closures in the Costa del Sol and Costa Blanca areas are badly hurting the country’s tourist-dependent economy says the Bank of Spain.

Spain’s economy is heavily reliant on holidaymakers, and the Bank says the economy could shrink as much as 12.4 per cent this year if the State of Alarm lockdown lasts 12 weeks.

The Bank of Spain did though predict that the economy would grow by at least 5.5 per cent next year, according to projections that it released today (April 20).

Even if Covid-19 lockdown restrictions are eased, bars and restaurants which normally employ hundreds of thousands of people across Spain, are highly unlikely to immediately reopen.

Based on some measures being looked at in other countries, some element of social distancing could be introduced to enable hard-hit restaurants to resume some element of trading.

Spain, after France, has the largest number of foreign visitors of any country, and no quick easing of inter-nation travel restrictions are likely in the near future.

The Bank of Spain said that the disruption suffered by the economy was, as in other countries, of “considerable severity,” although there was still great uncertainty as it looked at various scenarios depending on the length of the lockdown.

“The high contribution of tourism to GDP and employment, in a context where these sectors are suffering disproportionately from the consequences of the pandemic, contributes to the fact that the prospects of the Spanish economy have been particularly affected,” the Bank said.

In its worst-case scenario, it expected the unemployment rate to hit 21.7 per cent this year, easing to 19.9 per cent in 2021.