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MADRID, March 25 (Reuters) - Spain has experienced a severe disruption in economic activity since early March due to the coronavirus pandemic and restrictions implemented to halt its spread, the Bank of Spain said on Wednesday.
The central bank said the outbreak had altered “drastically” the favourable growth dynamics seen in the first two months of the year, which were similar to a quarterly growth rate of 0.5% registered in the fourth quarter. But it did not attempt to quantify the impact on gross domestic product.
“There is little doubt about the severity of the shock, which has radically altered the real and financial dynamics of the Spanish economy since early March,” it said, pointing to a high level of uncertainty regarding the duration and extent of extraordinary measures that made projections difficult.
Spain has recorded 3,434 coronavirus deaths and is Europe’s worst-hit country after Italy.
It has been in partial lockdown since March 14 and parliament is expected to approve later on Wednesday an extension of a two-week state of emergency by 15 days, until April 11.
The Bank of Spain said the state of emergency had caused a standstill in retail activity, with food the main exception, and practically shut down the hotel and restaurant sector, strongly impacting consumer spending.
Supply chain disruptions at a national and international level and the sharp decline in demand itself have led to the shuttering of some industries, such as auto-making.
Businesses in Spain have already started to temporarily lay off thousands of employees.
“There is no data yet to assess the negative impact on employment, but it is most likely going to be very significant,” the Bank of Spain said, adding that job losses may be reversed if the coronavirus shock proves temporary. (Reporting By Jesús Aguado, Editing by Andrei Khalip and Catherine Evans)