The foreign sector applauds the decision not to paralyze export and import activity

It is considered essential

The paralysis of all economic activity decreed by the Government last weekend and until next April 9 does not affect exporting and importing companies.

---

Through Royal Decree-Law 10/2020, the Government established a recoverable paid leave for workers who do not provide essential services between March 30 and April 9, with the aim of limiting mobility as much as possible and thus helping to stop the contagion curve of covid-19.

 

After its entry into force, the Ministry of Industry published a interpretative note for the industrial sector, in which the manufacturing industry that supplies essential sectors is exempt from the Royal Decree, as well as companies with international contracts. Specifically, and in relation to the foreign sector, “working people with respect to the import and export activities of all types of products, goods and materials, to the extent that they are configured as key to supply or compliance with international contract commitments.”

 

Furthermore, Royal Decree-Law 10/2020 had already considered essential – and therefore exempt from paralysis – companies that provide services “in those sectors or subsectors that participate in the import and supply of medical supplies, such as logistics, transportation, storage, customs transit companies (freight forwarders) and, in general, all those that participate in health corridors", as well as "those that provide services in the production and distribution chain of goods, services, health technology, medical supplies, protective equipment, health and hospital equipment and any other materials necessary for the provision of health services.” In the same way, among others, those performed by people “who work in the distribution and delivery of products purchased in online commerce, telephone or correspondence", and "those essential for the maintenance of the productive activities of the manufacturing industry that offer the supplies, equipment and materials necessary for the correct development of essential activities."

 

Valuation of the foreign sector

 

This decision of the Government therefore exempts those companies with export or import activity from the total paralysis of economic activity. A decision that has been well received by internationalized Spanish companies. Thus, from the Exporters and Investors Club, its president, Antonio Bonet, sees it as “very positive and appropriate.” “The Ministry of Industry, Tourism and Commerce has been able to interpret the reality and complexity of the outside world very well,” adds Bonet.

 

In relation to the order to cease all non-essential productive activities, amec, the Association of internationalized industrial companies, understands that the companies with the highest level of digitalization and automation of their productive processes will notice the slowdown less, and that those with productive capacity outside Spain They will have greater possibilities of continuing their activity.

 

Although restrictions on foreign trade are less limited than in other sectors of the economy, the truth is that The coronavirus crisis is also being felt in a sector that in Spain represents 34% of the GDP.

 

In fact, Spain is, along with Italy, the European country most affected  due to the economic impact of covid-19. According to amec, lThe impact on our industrial companies varies depending on the sectors and their degree of internationalization.. Although most have experienced a drop in new orders and expect a drop in revenue, companies in the food technology sector, for example, continue at a similar level.

 

Impact on global trade

 

The truth is that the covid-19 crisis is a global crisis, which will affect all economies to a greater or lesser extent. According to him amec observatory, prepared by the Association of Internationalized Industrial Companies, the IMF itself expressed evidence that we have entered a recession, as bad or worse than that of 2009, and postponed the recovery prospects to 2021.

 

Similarly, UNCTAD (the United Nations Conference on Trade and Development) recognized that the impact of the covid-19 pandemic will be worse than initially expected. In their revenue forecast update for the 5.000 largest multinationals, 80% have made downward revisions, with a much greater impact on developed countries, where a decrease of -35% is expected.

 

According to the OECD, most of this impact will be focused on trade, professional and real estate services, tourism, restaurants and leisure. The impact on industry, with the exception of the automobile sector, is being less, being less labor intensive and less exposed to health restrictions.

 

How long will the crisis last?

 

Of course, amec highlights that despite all the negative data, the positive message is that, unlike other crises, The current slowdown in demand and supply suffered by economies is not due to structural damage to productive capacity.. The association considers that it will be a temporary crisis for the economy and, as observed in China, we could recover relatively quickly.

 

Although this recovery capacity will depend on two elements: the severity, duration and extent of the pandemic, and the adoption of economic measures with sufficient capacity to prevent liquidity problems from becoming a solvency problem, leading to a wave of bankruptcies and layoffs, stand out from amec.

 

In a similar sense they see it from the Exporters Club. “It is difficult to make forecasts because a lot depends on how long the crisis will last, the degree of paralysis of economic activity, If economic activity comes to a standstill, getting back to cruising speed is not an easy issue.”explains Antonio Bonet. “The longer activity is paralyzed, the more exports will be harmed,” adds the president of the Exporters Club. For this reason, they applaud the correction that the Ministry of Industry has made to consider (exports and imports) as essential activities, because although "it will not be working at 100%, but it would be better if it worked at 40, 50, 80%, that would be better." nothing,” adds Bonet.

 

Economic and specific measures for the foreign sector

 

At this time, the Exporters Club demands measures to “prevent companies from closing”, such as providing them with liquidity, giving them the freedom to adjust their workforce or delay the payment of taxes. “The measures that the Government has announced, the 100.000 million guarantees to access credit, there is still no information on how it is working but that is essential,” Bonet values.

 

Once productive activity is recovered again, it is when we will have to think about the specific measures for the foreign sector, and specifically these will depend on “the degree of paralysis that we have had, the mortality of companies that there have been and what it is. what other countries are doing,” analyzes the representative of the Exporters and Investors Club. "But First the national economy has to recover"He concludes.