Spain | Vaccination is the key to tourism's comeback, but more is needed

Summary

COVID-19 and the restrictions put in place to try to limit its spread made 2020 a very difficult year. Widespread vaccination and fiscal and monetary stimulus plans will allow growth to return in 2021 and 2022.

Key points

• Key points:
• The health impact and the sectoral specialization of the Spanish economy, in which personal-service activities and consumption linked to social activities carry a greater weight, explain the higher contraction seen in Spain, as well as the regional dispersion in the fall of GDP in 2020.
• Regions more specialized in industrial or agricultural activities (such as Castile-La Mancha, Extremadura, Cantabria, Aragon and Galicia) saw activity recover relatively quickly when lockdown measures were lifted and demand for goods progressively returned.
• However, those regions reliant on tourism, especially those marketed to foreign visitors (such as the Balearic Islands and the Canary Islands), have been most affected, as the supply of services to people continues to be directly affected by the ongoing restrictions imposed to contain the spread of the pandemic.
• Widespread vaccination will allow tourism activity to recover, and the communities hit hardest in 2020 will see greater recovery in 2021, provided that, as outlined in our forecasts, mobility has partially recovered by the summer season.
• Herd immunization and the recovery of activity in Europe, combined with expansionary policies and European funds, will allow growth to accelerate again in 2022 and extend to communities specializing in investment products. Reforms will be key to capitalizing on them.

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