Spain Economic Outlook. First Quarter 2021

The Spanish economy could have contracted by 11.0% in 2020 and grown by 5.5% in 2021 and 7.0% in 2022. GDP growth exceeded expectations in 3Q20, but the slowdown in the fourth quarter would have been intense. Moving forward, a significant acceleration is expected in the second half of 2021

Key points

• Key points:
• World GDP will expand by around 5.3% in 2021 and 4.1% in 2022, after having fallen by around 2.6% in 2020. In the short term, growth will continue to be affected by the pandemic. However, economic policy support and coronavirus vaccination programs will drive growth from mid-year.
• In Spain, GDP growth estimate for 2020 is revised upwards from -11.5% to -11.0%, but the growth forecast for 2021 is reduced by 0.5pp to 5.5%. The latter is explained by the deterioration observed in the EMU as a result of the increase in contagion, the upsurge in uncertainty recorded in Spain by the third wave, and the exhaustion of some of the demand policies.
• In 2022 we expect growth to accelerate to 7%. A massive vaccination, both in Spain and the rest of Europe, the expansive fiscal policy on which the GSB is betting for 2021, the NGEU implementation, the boosting measures taken by the ECB and the Government, as well as a high unused productive capacity would be behind the upturn.
• Risks. In the short term, control of the disease and the speed of the vaccination process are a priority and put a downward bias on forecasts. Efficient use of NGEU funds and consensus on reforms that increase the economy's growth potential will be key

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