MADRID – If economic forecasts for Spain disappoint this year, 2022 may be even more difficult. The Bank of Spain estimates the biggest impact of the supply crisis will occur in 2022, amounting to some €11 billion.
Also, 80% of Spanish companies expect the biggest blow to come next year as a result of trade bottlenecks and the fatal supply crisis. According to the financial institution, the negative consequences will only amount to 0.3% of GDP this year, about €3.7 billion. The blow for next year could be more than €11 billion. That equates to 0.5 to 0.9% as the negative effects amplify.
The economists at the Bank of Spain are considering the negative impact on the industry, as well as the lingering effect on the national economy caused by the supply crisis and the subtraction of lower international demand.
Significant disruptions in global supply chains
The Bank of Spain underlines “significant disruptions” in global supply chains that have occurred in recent quarters, weighing on the recovery of activity in major world economies.
The bottlenecks have affected different branches of activity in a very heterogeneous way. They also have a particularly significant impact on those industries that supply goods used by other industries.
Auto industry hit extra hard
The car sector in Spain is particularly affected. Many manufacturers here have been forced to stop or scrap their production plans due to the supply crisis. For Spain, this is particularly bad news because of the ‘high weight and relevance of this sector in the economy’. More than half of the negative impact in 2022 corresponds to the automotive sector.
Disruptions up to and including the third quarter of 2022
The Bank of Spain assumes the supply crisis disruptions will continue during the fourth quarter of 2021 and the first three quarters of next year. However, the institution warns there is “significant uncertainty” about the degree of persistence these bottlenecks could create in the future.
The hardest is yet to come
Most Spanish companies think the hardest part is yet to come. More than 60% of the Bank of Spain Survey on Business Activity (EBAE) believe the supply crisis will be worse in 2022.