Spain Economic Outlook. Fourth Quarter 2021

Summary

Spain's growth expectations for 2021 and 2022 are moderated to 5.2% and 5.5%, respectively. These figures are weighed down by a number of negative factors such as disruptions in production chains, rising energy prices and delays in the implementation of NGEU funds.

Key points

• Key points:
• Global economy recovery will continue, but with less momentum than expected. Covid-19 vaccination and significant stimulus will continue to support growth, which will, however, be affected by more persistent supply shocks. Global growth will be 6.1% in 2021 and 4.6% in 2022, slightly lower than expected.
• In Spain, growth in 2021 is revised downwards, from 6.5% to 5.2%. Despite the good behavior of household consumption, the revision is explained by the worse performance of investment and a more negative contribution from the foreign sector.
• In 2022, Spanish GDP could accelerate to 5.5%. The control of the pandemic, the utilization of the accumulated savings by households, the momentum in the execution of the NGEU funds, the ECB measures and a high productive capacity would offset the negative effects of the recent bottlenecks and energy prices.
• The short-term bias is to the downside. The implementation of NGEU-related funds needs to be accelerated. In addition, bottlenecks and rising input prices and transport costs could put the recovery at risk. In the medium term, the bias will depend on reforms to be implemented over the coming months.

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