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Spain revises its growth forecast for 2021 downwards, to 6.5%

Spain revised down its GDP growth forecast for 2021 on Friday and placed it at 6.5% compared to 7.2% previously forecast, due to a first quarter weighed down by the third wave of the pandemic of covid-19.

“The recovery (…) has slowed down in the first quarter below what we expected in October,” Economy Minister Nadia Calviño said at a press conference.

The Spanish economy suffered in January and February from the new restrictions imposed to combat the third wave of the coronavirus and was also affected by the Filomena snowstorm, which paralyzed Madrid and much of the country for ten days in early January.

The new forecast is similar to the one unveiled this week by the International Monetary Fund (IMF), which expects the Spanish economy to rebound 6.4% in 2021, the highest increase among the so-called “advanced” countries, along with the United States.

Spain, which is highly dependent on tourism, was one of the western economies most affected by the pandemic in 2020, with a 10.8% drop in GDP.

The Bank of Spain also lowered its growth forecast for 2021 to 6% year-on-year at the end of March, citing as another important factor the delay in the implementation of the European recovery megaplan, of which Spain will be one of the main beneficiaries.

By 2022, the government forecasts a growth of 7%.

On the other hand, the Spanish government improved its unemployment forecast, estimating that it will affect 15.2% of the workforce, compared to 16.9% previously expected.

At the end of December, the unemployment rate stood at 16.1%. Spain ended 2020 with more than half a million additional unemployed, especially in the tourism and hospitality sectors, where employment, already precarious, was severely affected by the pandemic.

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