The small retail associations have reported that spending in the run up to Christmas, despite numerous campaigns to try and encourage consumers to get out and spend, was 25 percent down on 2019 in the centre of Palma while across the island in non metropolitan areas, spending rose by 26 percent.
One of the biggest reasons has been the lack of tourists, especially international ones but there also appears to have been a change in consumer habits as a result of the pandemic. People are apparently opting to shop closer to home when possible and avoid the busy city centre of Palma, for example.
That said, the centre of Palma has been relatively quiet over the past few weeks while the out-of-town shopping complexes have been booming. But, if on the whole, domestic expenditure has contracted, that is not good for the economy.
As it is, the IMF readjusted its forecast for the recovery of the Spanish economy earlier this week. The IMF’s latest forecast is that Spain’s economy will not recover to pre-pandemic levels until the end of 2022 at the earliest and quite probably not until 2023.
Tourism is going to be the key driving force behind the economic recovery, along with the handouts from Brussels, but will it be enough? If domestic consumer confidence does not recover, Spain has a problem.