Recovery during the first quarter was not possible due to the destruction of economic activity by the third wave of the pandemic and the storm Filomena. GDP decreased 0.4% in the first quarter of the year due to the drop in consumption and investment and returned to negative values after having registered positive rates of 17.1% and 0.0%, respectively, in the third and last quarter of 2020, according to National Accounting data published this Thursday by the National Institute of Statistics (INE ).
This quarterly decrease of 0.4% has moderated one tenth with respect to the data advanced by the statistical agency at the end of April, when a 0.5% decline in GDP advanced for the January-March period, affected by the third wave of the Covid.
The INE explains that at that time most of the statistical indicators on recent economic evolution offered results up to February, while the results published today do include all the statistical indicators of the first quarter of the year, “whose information already covers, in the vast majority of cases, the whole of the same.”
In year-on-year rate, GDP fell in the first quarter at a much slower rate than in the fourth quarter of 2020 and one tenth less than expected in the data advance. A) Yes, the Spanish economy fell by -4.2% year-on-year in the first quarter of January 2021 (compared to -4.3% in advanced data) and compared to the -8.9% drop experienced in the previous quarter.
However, with this year-on-year contraction of 4.2%, there are now five consecutive quarters of negative year-on-year rates, although this is the most moderate in that period.
Fall in consumption and employment
The third wave, together with the storm Filomena suffered in January in the center of the peninsula, was responsible for a fall in consumption of 0.5% in the first quarter as a result of the return to negative rates of consumption by households, institutions non-profit at the service of households and public administrations, which mshowed decreases of 0.6%, 2.2% and 0.1% until March, compared to the positive rates of 0.0%, 0.6% and 1.3% of the previous quarter, respectively. Public spending did not show negative rates since the fourth quarter of 2016.
What’s more, employment in the economy, measured in hours worked, decreased 2% compared to the previous quarter, although full-time equivalent jobs registered a growth of 1.4%. In year-on-year terms, hours worked varied by -3.6%, a rate 2.5 points higher than in the fourth quarter of 2020, and full-time equivalent positions decreased by -1.9%, 3.3 points more than in the fourth quarter, which represents a decrease of 343 thousand full-time equivalent jobs in one year.
Investment also returned to negative values in the first quarter after two quarters of advances. This indicator contracted by 0.8%, compared to the growth of 1% in the previous quarter and the historical increase of 21.5% that it experienced in the third quarter of 2020.
The same happened with exports and imports, which until March showed negative rates of 1.4% and 1.3% after having registered advances of 4.6% and 6.2% in the last quarter of 2020.
By sectors, the only one that increased its gross added value in the first quarter was the services sector, with an advance of 0.3%. In contrast, construction fell 4.3%; that of industry fell by 2.3%, and that of agriculture fell by 2.9%