Spain Economic Outlook. Fourth Quarter 2020

Summary

The Spanish economy could contract by 11.5% in 2020 and grow by 6.0% in 2021. The fall in GDP exceeded 20% in the first half and it is estimated that the recovery in the third quarter would have been 14% t / t. In any case, a significant slowdown is expected during the last part of 2020.

Key points

• Key points:
• The recovery of global activity is expected to gain momentum in 2021. The expected approval and distribution of effective vaccines and treatments against COVID-19 will probably allow a progressive relaxation of social distancing measures over the next year, first in the world's major economies, and then in the rest of the world.
• In Spain, the expectations about a 11.5% contraction in GDP during 2020 is maintained but growth forecast for 2021 is revised downwards by 1 percentage point (pp) to 6%. This revision is a consequence of the deterioration of the epidemiological situation, both in Spain and in the EMU, and the fact that the effects of demand policies could be beginning to weaken.
• The Plan for Recovery, Transformation and Resilience of the Spanish Economy, can add about 1pp to GDP growth the following year and 2pp in 2022
• Although the risk balance remains negative, more positive scenarios cannot be ruled out as a result of the NGEU either. It is especially important to build consensus around the approval of measures that can anticipate the impact of resources from Europe and maximize their effect through the necessary reforms.

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