08 Jul 2020
Posted in Banking
Spanish economy hit hard but spending is expected to increase as lockdown loosens, says GlobalData
Spain’s reliance on its tourism sector has seen its economy and payments industry suffer during the pandemic, but bars and restaurants reopening will provide a much-needed boost, says GlobalData, a leading data and analytics company.
GlobalData still expects a decline in card growth in 2020, compared to its pre-COVID-19 forecasts. This is because despite consumers moving towards card payments, it will be outweighed by an overall decline in consumer spending. As such, GlobalData now forecasts the transaction value of card payments to rise by just 1.0% in 2020, compared to 9.9% previously.
Spain’s travel and tourism industry accounts for 12% of its GDP, so it is an essential part of the economy, which has effectively been shut down. It was one of the worst hit European countries, but also one of the earliest and it is gradually starting to come out of lockdown. However, some parts of Spain are currently in a local lockdown, following a surge in COVID-19 cases.
Ravi Sharma, Payments Analyst at GlobalData, comments: “Consumers will be able to spend in restaurants and bars again, but they will be at reduced capacity. We expect them to shift from low-value cash payments to digital methods. In particular, we expect increased usage in mobile wallets and contactless cards, especially as the spending limit on contactless has been increased.
“Even as restaurants and bars open up, consumers will still seek online purchases. Therefore, GlobalData expects the Spanish e-Commerce market to grow at an annual rate of 18.5% in 2020, compared to the company’s previous estimate of 13.1%. Consumers are still looking to avoid disease vectors as much as possible.”