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16 June 2020

New report by Deusto BBK Behatokia Observatory: The day after COVID, towards a more sustainable competitiveness

The BBK Behatokia Observatory has presented the results of the third Biscay-wide wave of surveys launched on the situation we are experiencing with the COVID-19 related crisis, to know their opinions on this issue. Within this framework, and in line with citizens' growing concern about the economic situation, the latest Economic Outlook Report prepared by Deusto Business School for the Observatory was also presented, together with an assessment by expert Emilio Ontiveros at an online meeting entitled: "Post-COVID-19 Economic Outlook".

Results of the third wave of surveys

This third wave was conducted between 4 and 11 June when Biscay was in Phase 2 and 3 of the de-escalation. The prevailing feelings among Biscay' s population are fear and concern. Other emotions such as anger or rage, which were very relevant at the beginning of the lockdown, have now become diluted.

There is a significant fear of a possible resurgence and of having to return to a lock down situation, a fear that is based on a considerable mistrust of the behaviour that others, our fellow citizens, are having. The disease is perceived as more lethal than at the beginning of the process, but at the same time it is perceived as less contagious.

At the current stage, cinemas, shopping centres and events are the places and circumstances that trigger the highest degree of insecurity among the population, while 87.5% of the total claim to have made purchases in small shops, the degree of insecurity perceived in these establishments being very low. The actions implemented by BBK in this context during the crisis, such as the "Kreo en ti" campaign, the approach to culture through the Sala BBK Etxean initiative, or the strengthening of BBK Azoka, have been well received.

The score given to Town and City Councils (6.1), the Provincial Councils (6.0) and Basque Government (6.0) has improved and continues to exceed that given to the Spanish Government (5.5). The European Union, departing from a rather negative starting point, has improved but remains negative. Citizens demand that political leadership in emerging from the crisis should be underpinned by honesty.

Finally, the idea that the impact on our economy is going to be very strong is gaining strength, a concern that is increasing with each wave.

Further information

Economic Outlook Report and Emilio Ontiveros' expert opinion

The fact is that the latest data collected in the Economic Outlook Report produced by Deusto Business School and the assessment of the different economic forecasts for 2020, 2021 and 2022 draw a scenario of "asymmetric V" recovery, with a recovery period that will take until early 2022 to reach pre-crisis levels.

These forecasts were also confirmed by Emilio Ontiveros, President of AFI and Emeritus Professor of Business Economics at the Autonomous University of Madrid, who estimated the drop in GDP at -8.9% in 2020, followed by a recovery of +6.2% in 2021, due to greater impact on the most affected sectors (tourism, hotels and restaurants, leisure and art), and the smaller average size of our companies.

The expert predicted a day after with "existential concerns" in some sectors, and a reduction in the business census. The surviving companies will be more socially responsible, and will pay more attention to reputational capital in an economy with a greater public role and more focus on the environment.

He also endorsed the Observatory's estimates on the increase in Public Debt, which with a 10% deficit in 2020, will reach 116% of GDP (higher than that of Germany), in line with that of France, and lower than that of Italy.

Presentation by Emilio Ontiveros. 

In this scenario, the message launched by Deusto and BBK Behatokia Observatory has been straightforward: neither data nor forecasts will bring us out of this crisis. We need to be proactive, focus on opportunities and avoid the main threats, working more together than ever through private and public-private partnerships.

The Report identifies two opportunities: the European Reconstruction Funds (Next Generation EU) and foreign markets, in a scenario marked by competition from China and the United States.

In the first, the leadership of Basque administrations in the definition and defence of these projects, and the rapid response of the different socio-economic actors will be essential so that this aid comes as soon as possible and serves to better prepare our economy against further challenges. In the second, the leading role will be played by Basque companies, which must face this scenario with caution and audacity, where, as usual, there will be winners and losers.

Finally, the great challenge facing the entire society has been highlighted, focusing on preventing a second wave of contagion in the Basque Country at all costs. The social distancing measures, the use of masks and the caution in social relations become extremely important in the scenario of these coming months. Relaxing these measures is, right now, the greatest threat to the economy, employment and prosperity of our society. 

Economic Outlook Report June 2020.