The mud is still present in many streets of the 15 municipalities in Valencia flooded with more virulence by the floods caused by DANA on October 29. Some cities are trying to face the return to normal with much of their economic fabric devastated and where, after the first impact, consumption remains at a minimum, given the impossibility for most basic businesses to resume their activities with guarantees.
He household spending in what was baptized as zero point of DANAthe 15 cities that suffered the most serious damage, He almost completely collapsed in the days following the tragedy and barely recovered over the next week.according to a report prepared by CaixaBank Research. A study carried out using information from credit cards, payment terminals and ATMs of the bank itself.
So, the first week after DANA, Household card spending fell by 83% and cash withdrawals from branches and ATMs fell by 82%. compared to the figures that were recorded on the previous days of October in the same municipalities. An area with a population of more than 265,000 inhabitants, or one in ten inhabitants of the province of Valencia, with municipalities such as Paiporta, Sedaví, Picanya or Utiel.
The analysis shows that this initial collapse in consumption barely recovered over the following week. SO, Between November 3 and 9, spending on credit and debit cards was 73% lower than in the period before the cold snap.while cash repayments, although they recovered to a greater extent, remained 65% lower than the previous situation.
A development which reveals how complex it is to resume economic activity in entire neighborhoods where shops and all types of businesses have disappeared. In fact, the CaixaBank report clearly shows the contrast between the zero point and the 60 other municipalities affected to a lesser extent but also included in the initial declaration equivalent to the catastrophic zone.
In the first days after DANA In the least impacted municipalities, reimbursements increased and card purchases barely decreased by 1%. compared to usual. The following week, the volume of spending and card withdrawals at ATMs and branches was even higher. to the average for the rest of October, respectively between 5% and 15%.
Collapse of commerce
One of the most obvious realities confirmed by the document prepared by the CaixaBank Economic Studies Department is that the vast majority of businesses still do not open their doors in these 15 municipalities. More than 90% were unable to open in the days following DANA and ten days later almost 70% were still inactive. in what is classified as zone zero, according to data collected from POS terminals. These percentages contrast with the situation of the 60 municipalities which were less affected, where more than half of their businesses were able to open after the weather phenomenon and ten days later, those which were still inactive were less than one in ten.
Logically, this inability to open to the public has made small businesses the sector hardest hit by the drop in consumption, according to data analyzed by CaixaBank Research. In those first two weeks, the collapse in in-person spending at retail stores exceeded 90%.with virtually no improvement in between.
He leisure and hospitality are other victims. During the first week they suffered from a 85% drop in expenseswhich eases to about 75% in the second week. As in the case of commerce, the complete destruction of bars and cafes after the passage of water posed an insurmountable obstacle.
But the shock wave of the catastrophe goes much further. Images of hundreds of stacked cars and the collapse of roads, railways and bridges has also meant that spending by residents of these areas on transportation and gas stations have fallen to very low levels. During these first two weeks, the figure was 70% lower than usual before the tragic DANA.
To understand how much daily life has changed in these localities, one of the points that best illustrates it is the recorded collapse in spending on essential products. During The first week it was reduced by more than 65% and the second the reduction exceeded 55%..
The comparison with other affected areas and even with the rest of the province of Valencia explains why many compare the streets of this zero point to a war scene. In both cases, spending on basic necessities skyrocketed, between 15 and 30 percent. Partly also because due to the lack of networks and supplies in these towns, relatives and neighbors were responsible for supplying the thousands of affected people in neighboring towns.
But the report further shows that the impact of DANA has extended beyond the affected regions, with a general drop in consumption in hospitality and leisure throughout the province of Valencia. Of a reduction of almost a third in the first weekwhich also coincided with a long festive weekend during which the weather alert was maintained and cancellations multiplied, was attenuated until it fell below 10% in the following days. In the case of retail, after a decline in the first days, both in the affected areas and in the rest of Valencia, it rebounded again the following week.
Macroeconomic impact
While the damage is still being assessed, analysts and academics are already beginning to quantify in macroeconomic terms what constitutes the greatest natural disaster Spain has experienced this century. In the case of the CaixaBank research service, estimates that the impact could subtract one or two tenths from the GDP of the Spanish economy as a whole in the fourth quarter this year, we are waiting to know the details of the reconstruction plans for the years to come to assess their long-term effects.
A forecast in line with that of the Bank of Spain, which limited to 0.2 points the possible reduction in long-term GDP expected due to the effect of losses and damages from DANA on the Spanish economy as a whole.
