Catastrophic floods in Spain - Cost of damage as much as 0.2% of GDP!
Catastrophic flooding in eastern Spain last month is likely to have a negative impact of 0.2 percentage point on gross domestic product in the fourth quarter, the Bank of Spain said, also expecting a mild acceleration in inflation.
More than 200 people died in the deadliest floods in Spain's modern history on October 29, most of them in the Valencia region, where flood-hit areas account for about 2% of Spain's economic activity.
Flooding after torrential rains destroyed cars, bridges and houses, paralyzed businesses and severely damaged crops and industrial plants.
"The estimates are subject to considerable uncertainty, but based on previous weather-related events, the estimated impact on GDP is -0.2 pp in the current quarter, remaining negative a year later," the central bank said in a statement. presentation. She also said the floods would cause consumer prices to rise by 0.15 percentage points.
Before the floods, the government expected the Spanish economy to grow by 2.7% this year, far outpacing its European economy. Spanish consumer prices rose by 1.8% in the 12 months to October. The government has announced an aid package of 14.36 billion euros to help families and businesses cope with the economic impact of the floods.
The Bank of Spain governor said it would be desirable for such aid to be "temporary and specifically targeted" at affected industries to reduce long-term costs.
Damage to businesses in flood-hit cities could reach more than 10 billion euros, with bank loan exposure in the affected area worth about 20.6 billion euros, representatives of local firms and a Bank of Spain official said earlier in the day. this month.
The Spanish banking sector will be able to absorb the blow, including the smaller lenders most exposed to the hardest-hit parts.
In total, the central bank identified almost 27,000 companies with outstanding loans and half a million borrowers in those regions.
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