Spain sees worse-than-feared contraction in 2020, improvement in 2021

Spain is experiencing a second wave of COVID-19 infections, with the highest caseload in Western Europe. For 2021, Calvino forecast GDP growth of 7.2%, from a previous estimate of 6.8%.

Spain's government forecast on Tuesday a worse-than-feared contraction of the coronavirus-battered economy this year, but a strong rebound in 2021 with a possible return to pre-pandemic levels in 2022.

Economy Minister Nadia Calvino told a news conference the government now foresees GDP to fall 11.2 % in 2020, down from a previous prediction, in May, for a 9.2% slump. Spain is experiencing a second wave of COVID-19 infections, with the highest caseload in Western Europe.

For 2021, Calvino forecast GDP growth of 7.2%, from a previous estimate of 6.8%. Growth could go to as much as 9.8% next year thanks to the European Union recovery fund, according to a presentation. The public deficit is expected to be worse than previously estimated, at 11.3%, before improving to 7.7% in 2021.

Unemployment would reach 17.1% this year and 16.9% next year, not quite as bad as previous forecasts, according to the presentation. Calvino said the government plans to issue less debt in 2020 than previously scheduled.

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