Spain | A recovery and a possible cliff edge

BBVA Research’s forecasts point to GDP growth of 6.5% this year and 7% in 2022. This is due to the impulse from private expenditure in 2021 and to the acceleration of public spending in 2022, thanks to the roll out of resources related to NGEU.

Key points

• Key points:
• The progress made in vaccinations has been fundamental in enabling a reduction in uncertainty and more spending. There is also evidence that, with each new wave of infections, we have learned how to reduce the economic impact of the measures needed to contain the spread of the virus.
• In the first wave, there was a drop of around 70% in the consumption of services compared to the same period in 2019 (based on BBVA card expenditure data). In the second, the fall was 25%; while in the third and fourth, expenditure remained above the levels seen two years earlier.
• Service sector recovery can also be observed through the positive performance of hospitality, entertainment and leisure, and accommodation expenditure. In fact, figures for June showed domestic tourist spending equaling that of the same month in 2019.
• The strong performance of machinery and equipment investment is also worth highlighting. While in the previous crisis we needed more than 45 quarters to return to 2008-levels, on this occasion only 6 or 7 would be needed.
• A deterioration in the external perception of health security in the country or a delay in the implementation of the plans related to the NGEU would have devastating effects on a recovery that, for the moment, is based solely on the spending of Spanish households and that without major reforms, it seems cyclical.

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