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Coronavirus 15 Apr 2020

BBVA Research uses big data to analyze the impact of COVID-19 on Spanish consumer spending

BBVA Research has used big data technologies to examine the impact of COVID-19 on Spanish consumption. The conclusions reflect a 49 percent average decline in consumer spending. The analysis has led to a collaboration between researchers at BBVA Research, the University of Cambridge, the Imperial College of London, and the University of Edinburgh. The use of anonymous transactional data to gain a real-time reflection of reactions to the crisis and economic policies was justified for decision-making purposes.

The academic article, published under the title ‘Tracking the Corona Crisis with High-Resolution Transaction Data’ confirms that data managed by BBVA Research provides “a unique opportunity to study the impact of the ongoing crisis in Spain—and the policies put in place to control it—on a daily basis.”

In the study, BBVA Research looked at anonymized and aggregated data related to 1.4 billion card or BBVA point of sale transactions since 2019, which demonstrated the changes in Spanish consumption habits and the exceptional impact the crisis has had on spending.

The initial data show how just prior to the declaration of the state of emergency, there was a hoarding trend, especially for basic goods and food products. Consequently, at the end of the week before the state of emergency (March 14-15), there was a nearly 20 percent increase in card transactions.

Consumption takes a nosedive

After the state of emergency was declared, consumption in Spain did nothing but fall. The average per person daily spend using a card dropped 49 percent compared to the same day a year ago.

Measurements of weekly spending show an even greater decline. Since March 20th, weekly credit/debit card spending fell close to 60 percent with respect to the same week in 2019. The following week, with the Easter holiday approaching, the drop in spending tailed off somewhat, standing at 51 percent compared to the same week last year.

Food is undoubtedly the only sector that has registered an increase in spending, having doubled the week just prior to the state of emergency and has continued with a year on year rise of 60 percent. The days leading up to the Easter holidays (between April 6th and 8th), food spending skyrocketed, growing 95 percent y-o-y.

Another category of spend that has seen some isolated growth has been in health care. The weekend before the first quarantine measures were put in place saw a 30 percent increase in spending on health care products, primarily on pharmaceuticals. Thereafter, spending on pharmaceuticals dropped, stabilizing at around minus 50 percent, year-on-year; the health and pharmaceutical expenditure at large retail outlets currently stands at about year-on-year minus 30 percent.

The authors believe that analysis using big data techniques helps quantify the crisis’ impact and the steps taken to contain the pandemic

Spending in the rest of the sectors (non-essential consumer goods and  services such as catering, leisure and entertainment, travel, clothing and footwear, etc.) has dropped by more than 90 percent.

The impact on e-commerce has been much lower, but with drops as much as 44 percent during the first week of the state of emergency. Nevertheless, Internet purchases have taken a much larger piece out of total consumption, representing up to 20 percent of total card transactions, up two points from a year ago.

The areas that have seen an increase in Internet shopping are the large retail outlets and foodstuff providers, where card purchases have multiplied by 1.5. Additionally, online spending for healthcare products has doubled and spending on home delivery services from restaurants and bars has increased 50 percent. In contrast, spending at travel agencies and transportation has fallen to virtually zero.

Spain’s regional areas

Credit and debit card transaction data has also lent itself to segmenting the study into regional areas (Spain’s “Comunidades”). The crisis appears to have hit Madrid the hardest with a weekly drop in credit card spending of 70 percent. The Balearic and Canary Islands, regions that depend largely on tourism, have also been severely impacted. In contrast, Asturias, Castilla-La Mancha, and Catalonia stand above the national average, with declines in consumer spending nearing 50 percent.

The study also reflects the impact that the coronavirus has had on foreign spend in Spain. Foreigners returning home and tourism coming to a halt has resulted in a close to 60 percent drop of foreign resident spending in Spain. At the same time, Spaniards living abroad have reigned their spending in by 97 percent.

An appeal for collaboration

These conclusions are detailed in the article published by the University of Cambridge and signed by researchers Álvaro Ortiz, Juan R. García, Tomasa Rodrigo, and José Ruiz from BBVA Research; Vasco Carvalho (University of Cambridge), Stephen Hansen (Imperial College of London), and José V. Rodríguez Mora (University of Edinburgh).

The authors believe that analysis using big data techniques helps quantify the crisis’ impact and the steps taken to contain the pandemic by revealing the costs and how they are being distributed across the Spanish economy. The article argues that this type of exercise can be replicated and applied to other contexts.

The researchers conclude by calling for public-private and university collaboration to further explore the application of big data techniques on economic and financial analysis.

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