The Spanish Bank has revised its forecast for the economic recovery in Spain positively. According to the Bank’s latest forecast, the economy will return to pre-coronavirus levels before the end of 2022.
Spain’s gross domestic product (GDP) could grow by 6.2% this year, according to the latest forecast from the Spanish Bank. This shows an increase compared to the 6.0% forecast in March this year. For the coming year, the expected growth is another 5.8%; that is a positive adjustment of half a percent.
Important indicators give hope for economic recovery
According to Oscar Arce, Director of Economics and Statistics of the Spanish Bank, economic activity will increase significantly in this second quarter. Compared to the first quarter of this year, he expects a growth of 2.2%. While forecasts remain uncertain, key indicators are encouraging. Examples are the current decline in unemployment and increased demand for products and services.
Apart from the increased economic activity as a result of the vaccination campaign, the money from the European Next Generation emergency fund also contributes to a further recovery of the economy. Estimates put this positive contribution at one percentage point of growth in 2021; 2.4 percentage points of growth in 2022 and another 1.8 percentage points of growth in 2023. According to Arce, it is too early to say anything about any lasting damage the Spanish economy has suffered as a result of the pandemic.
All possible scenarios more positive than in March
As the course of the economic recovery remains uncertain, the Spanish Bank has published two other possible scenarios. In the most favourable scenario, GDP will increase by 6.8% this year and another 7% next year. In the least favourable scenario, if the number of corona infections increases again, GDP growth in 2021 is estimated at 4.6%. That is still a lot higher than the least favoUrable forecast from March, which was 3.2%. In that case, a growth of 5.2% is assumed for 2022 (versus a predicted 4.6% which was forecast in March).