At the same time, data from the August Business Perceptions Report (IPN), based on interviews with more than 100 company executives and an online survey of another 760, shows that almost 70% of those surveyed indicated that their company had cut costs, whether through reduced commissions and bonuses, cutbacks in overtime, or reductions in base salaries, among other measures (Figure 8). Household spending has been severely affected by the decline in income, which is reflected in the sharp contraction of demand in the second quarter, particularly from private consumption. Especially marked is the drop in services consumption, where social distancing measures have significant effects, such as the dramatic drop in spending on restaurants and hotels, transportation, health care and leisure activities. Nevertheless, the short-term outlook for consumption has improved in the third quarter due to a set of support measures and which is reflected in better business expectations—especially for trade—and, more recently, in improved consumer expectations. In recent months, a significant number of direct aid programs, subsidies, repayment deferrals and tax breaks have been implemented. As a result, the balance between the fall in income and aid received improved significantly between the second and third quarters (Figure 9). In addition to the above, part of the pension savings was approved for withdrawal. It is estimated that this will involve resources in the order of 6% of GDP, of which nearly half will go to consumption.
As for spending, after contracting by 4.2% this year, total consumption will resume positive growth in 2021 and 2022, consistent with a recovery in employment and household income, and with the positive short-term effect of the withdrawal of pension savings. Plus, the low base that will be left by this year’s contraction. The projection is that the recovery of economic growth will result in an increase in employment, albeit with lags that will vary according to the categories of occupations, sectors and activities involved. Thus, it is likely that, with the lifting of the strictest sanitary measures, employment in sectors such as construction and trade will show a significant upturn, as will self-employment. However, in activities more permanently affected by social distancing, changes in production methods or technology, the lags may be last much longer. In the short term, the expected recovery in consumption would be more biased towards goods—with a higher proportion of imports and a lower relative intensity of employment—than towards services. Thus, after rising by 6.8% in 2021, total consumption will reduce its expansion to 1.7% in 2022, considering that the temporary stimulus to household spending provided by the various income support measures will have dissipated and that 2021 will leave a higher basis for comparison. Gross fixed capital formation (GFCF), in particular its construction component, will recover as quarantines are lifted, especially in those works that were shelved.