Spain Economic Outlook. Third Quarter 2020

Summary

The Spanish economy could contract by 11.5% in 2020 and grow by 7% in 2021. The drop in activity could exceed 20% in 1H20. However, the easing of restrictions has allowed the recovery to begin. GDP could increase by 10% quarter on quarter in 3Q20.

Key points

• Key points:
• The global outlook is conditioned by the evolution of the Covid-19 pandemic, which has responded to different health policy strategies, so far with more success so far in Asia and Europe. Global growth is revised downwards from -2.4% to -3.2%.
• The fall in GDP in Spain is revised downwards to 11.5% in 2020 mainly due to the prolongation of containment measures and the greater impact of restrictions on demand.
• The impact of the crisis, in addition to being significant, has been heterogeneous and different as observed in 2008: it has affected more "social consumption" sectors (construction is not the trigger), to autonomous communities with greater exposure to them, to young people, and proportionally more to women and foreigners.
• The recovery is underway as a result of the easing of restrictions and economic policy actions to support demand.
• Risks remain skewed downwards, in an environment of still high uncertainty, but some factors are beginning to emerge that, in the absence of major shocks, could accelerate the recovery

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