Spanish Government announces fiscal stimulus package as coronavirus outbreak worsens

18 March 2020 (Last Updated March 18th, 2020 17:19)
Spanish Government announces fiscal stimulus package as coronavirus outbreak worsens

The Spanish Prime Minister, Pedro Sanchez, announced a sizable fiscal stimulus package worth €200bn ($220bn) in response to the worsening virus outbreak. The package is equivalent to one-fifth of Spanish GDP. The stimulus package is the largest announced in peacetime Spain.

Spain has been severely affected by the virus, reporting the second-highest number of cases and deaths in Europe with 13,910 infections and 623 deaths. The emergency budget announcement comes after the Prime Minister had revealed Spain is likely to lose three months’ worth of economic activity due to the virus and the subsequent quarantine measures imposed in the country.

The construction sector in Spain is also likely to face severe disruption in the coming months as the outbreak worsens. However, there are early indications that construction works on flagship construction projects are going ahead.

An example of a project that is going ahead is the Real Madrid football club’s stadium, the Bernabéu, which is currently being reconstructed. The project is worth €525m ($569m), and the construction firm in charge of the project, FCC Construcción is aiming to complete the reconstruction by July 2022. However, as the virus outbreak is expected to worsen in the coming weeks, more construction works are expected to be temporarily halted.

GlobalData expects that output in the Spanish constriction industry will expand by only 1.2% in 2020, but this is contingent on the virus being contained by the second half of the year. Under this scenario, the industry is expected to rebound in 2021 and 2022 with output expected to grow by 2.1% and 2% respectively. However, there is a possibility of a downward revision of the forecast if the situation deteriorates and the outbreak continues into the second half of this year.