Spain worsens economic outlook for 2020
Spain’s leftist government on Tuesday forecast a deeper-than-feared contraction of the economy in 2020 as the country grapples with a second wave of Covid-19 infections.
Economy Minister Nadia Calvino said the government now sees the economy, the euro zone’s fourth largest, falling 11.2 percent in 2020, compared with a previous forecast in April for a 9.2 percent slump.
But she said the economy was expected to rebound in 2021 with growth of at least 7.2 percent, mainly on the back of higher private consumption.
Spanish authorities imposed one of Europe’s strictest lockdowns to curb the pandemic from mid-March to late June, triggering one of the deepest recessions in the region.
The economy tumbled by 17.8 percent in the second quarter after falling by 5.2 percent in the first quarter, but Calvino said the recovery was “on going” in the third quarter.
A recession is commonly defined as two consecutive quarters of a contraction in GDP.
The unemployment rate will rise in the tourism-dependent country to 17.1 percent this year, from 14.1 percent last year, and will only drop to 16.9 percent in 2021 according to the government’s latest forecast.
Although the national lockdown was lifted in late June, Spain is currently fighting a second wave of the virus which has now killed over 32,000 people and infected more than 800,000, the highest infection rate within the European Union.
Spain’s economy is particularly vulnerable to the pandemic because of its reliance on tourism and its greater concentration of small companies, many of which do not have the financial strength to cope with even a short-term disruption.
However, it will benefit considerably from the historic 750-billion-euro rescue plan agreed by the European Union’s 27 member states in July under which it will receive 140 billion euros.