Press "Enter" to skip to content

Spain cuts its growth forecast to 6.5% after the contraction in the first quarter

Apr 9 (Reuters) – Spain’s government cut its forecast for economic growth for this year to 6.5% on Friday, well below its initially forecast range of 7.2% to 9.8%. after the new restrictions due to the COVID-19 pandemic caused a slight contraction in the first quarter and with the anticipation of delays in the arrival of rescue funds from the EU.

The Minister of Economic Affairs, Nadia Calviño, declared in a press conference that the Spanish economy should grow by 7% in 2022, and that production would return to pre-pandemic levels by the end of that year.

A third wave of coronavirus hit the country in the first two months of the year, while a huge snowstorm disrupted activity across much of Spain in January.

“The economic recovery is delayed a quarter,” Calviño said, adding however that the government expects a strong rebound in the second half of 2021.

The disbursement of recovery funds from the European Union will further boost the economy, but its impact will mainly be felt in 2022.

Calviño had estimated last year that European funds would raise Spanish growth to 9.8% in 2021. The growth forecast of 6.5% for 2021 includes the effects of the funds on growth, the minister said on Friday.

The government expects growth to accelerate in 2022 to 7%, before slowing to 3.5% in 2023 and 2.1% in 2024.

The Bank of Spain had already lowered its growth forecast for 2021 for similar reasons to 6%, while the International Monetary Fund expects a 6.4% expansion after production plummeted 10.8% in 2020.

(Information from Inti Landauro, Nathan Allen and Belén Carreño; edited by Andrei Khalip and Frances Kerry; translated by Darío Fernández in the Gdansk newsroom)

Read more

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *