Exports may fall 25%. Consequences of the crisis are asymmetric, concludes EY

The consultant's study points out that the economic consequences will not be the same for everyone, due to the weight of tourism and the budgetary margin of governments to act and mitigate or reverse the effects of this crisis.

Exports may fall 25% compared to 2019, with the macroeconomic variable most affected by the worsening economic crisis triggered by the covid-19 pandemic, according to a study by EY, which warns of the asymmetric consequences of this crisis.

The study notes that, although the immediate impact of the pandemic through confinement has hit all countries, the economic consequences will not be the same for everyone, due to the weight of tourism and the budgetary margin of governments to act and mitigate or reverse the effects of this crisis.

"Just as countries that are more dependent on more affected sectors, such as tourism, will face greater challenges in the economic recovery, so also countries where governments have less budgetary space will be those where the impact of the pandemic will be more prolonged", says the third edition of the Notebook of Notes on “The economic crisis of the covid-19”, of the EY with supervision of Augusto Mateus, strategic consultant of the consultant.

Given the main components of the Gross Domestic Product (GDP) in the first quarter, the study points to the existence of a different dynamic in Portugal compared to the main European and North American economies.

“In Portugal, GDP fell 1,3 percentage points higher than domestic demand, reflecting the negative contribution of external demand, while in Spain, France and Italy the variation was identical to that of domestic demand. Taking into account the significant contribution of the tourism component to Portuguese exports, it is expected to maintain this dynamic until the lifting of air traffic restrictions ”, says the study.

This new edition of the Notebook also stresses that the recognition of the seriousness and extent of the developing economic and social crisis “is important to achieve a balanced and timely definition of the necessary economic policy measures”, namely in the articulation between the need to mitigate the pandemic and its economic effects and the design and implementation of “a sufficiently credible and effective economic recovery program” in the transition to 2021.

The document also underlines that in a context of high uncertainty and contraction of the economy, the loss of income and the increase in expenditure - namely with measures to support employment, such as the simplified lay-off and unemployment benefits - will translate additional pressure on the public accounts of the countries with the highest public debt ratios.

"As a result, these countries will have a lesser capacity to ensure measures to support companies and workers for a longer period, as well as introduce measures to revive the economy in the post-pandemic", reads the document.

This new edition of the Notebook also points out the different rhythms in consumption of the different categories of products during confinement and later in the deflation, with the trade related to tourist accommodations, fashion and accessories, travel, or the press maintaining very significant year-on-year losses. during the month of May, when the country entered the second phase of deflation.

Fuel or transport consumption fell sharply in April, having managed to start some recovery in May.

The impact of the economic and social crisis also shows asymmetries at the territorial level, with consumption expenditures falling further in regions with greater tourist specialization and more gently those where there is greater dependence on public employment and pensions.

“Some comparisons between the breaks observed in the districts, respectively, in April and May 2020 compared to the same months of 2019 illustrate this differentiation well: Faro (-52% and -40%), Funchal (-44% and -26%) , Lisbon (-47% and -39%), Porto (-40% and -26%), Coimbra (-35% and -20%), Setúbal (-28% and -16%), Braga (-29% and -13%), Bragança (-22% and -1%) and Portalegre (-18% and 0%) ”, is mentioned.

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