The study service of the IFFE Business School has carried out a study on the impact that the coronavirus will have on Galicia, according to which the GDP will fall by around 8%, which is practically a full month. Consequently, this will have an impact on job losses so that unemployment will rise from the current 11.70% to 16%.
The report prepared by the centre located in Oleiros states that the economic effect will be very strong in our community, affecting above all the service sector, which represents 64% of Galicia’s GDP, and especially trade, tourism, hotels and culture, due to the impossibility of opening this type of business and holding events after the declaration of the state of alarm.
Among the data collected by the IFFE study, it is worth noting that the period of greatest impact in Galicia will be in the three months following the start of the quarantine, i.e. from March 15th to June 15th. During that time, as the report predicts, there will be a destruction of employment of almost 15%, which means about 160,200 jobs, with an annual impact equivalent to 53,400 unemployed.
The most affected sectors
The analysis also states that exports (mainly energy, cars, food and textiles, which account for 36.5% of Galicia’s GDP, or some 23,363 million euros per year with an average of 1,947 million euros per month) will be seriously affected. Thus, if in the next three months the general figure is reduced by a third, as they predict, we would go from 1,947 million euros to 1,284 million euros per month. This would mean a monthly fall of EUR 662 million, which translates into a reduction of EUR 1 987 million in annual GDP.
To a lesser extent, agriculture, livestock, fishing, construction and part of industry will suffer from the coronavirus health crisis, and some of these sectors may even experience growth.
In any case, as stated in the IFFE study, the most affected will be the self-employed, “which massively integrate the service sector, many of them without income and without protection,” as the report says.
Measures to contain the impact
Among the final conclusions of the analysis carried out by the business school is the need to “support the continuity of business activity and the maintenance of employment, especially for SMEs and the self-employed and, finally, to strengthen the protection of workers, citizens and families” to mitigate the impact of the crisis by Covid-19.
In addition, from IFFE indicate that “banks and financial institutions, origin of the previous crisis, must become from cause to solution. The European, Spanish and Galician governments must provide the essential liquidity in order to stop the destruction of the productive system”.