Part of the excess savings accumulated during the pandemic will be spent in Spain, boosting private consumption, indicates a report published by the European Commission.
According to the European Commission’s spring 2021 forecast, production is expected to start growing again in the second quarter of the year, initiating a rebound that will be stronger in the second half.
Overall, Spain’s GDP is expected to grow by 5.9% in 2021.
Spain experienced a strong economic recession in 2020, but amid continued high uncertainty, a strong rebound is expected for 2021.
The outbreak of the Covid-19 pandemic led the Spanish economy to an unprecedented drop in GDP in 2020 (-10.8 percent).
The contraction in economic activity continued in the first quarter of 2021, due to the restrictions and containment measures implemented both in Spain and in most of its main trading partners.
However, according to the report, the situation has recently improved with the relaxation of some restrictions and the advancement of the vaccination campaign.
Spain
The implementation of the Recovery and Resilience Plan will play an important role in boosting economic activity, particularly in the second half of the year, and investment decisions are likely to be influenced by the improvement in the situation.
Likewise, the contribution of external demand to the economic recovery will probably not be positive until 2022, when tourism is expected to approach its 2019 level.
This forecast is subject to great uncertainty and associated risks, especially in relation to the impact of new pandemic outbreaks, the advancement of vaccines and treatments, the behavior of economic agents after the pandemic, public measures to contain the impact of the pandemic and support recovery, the response of private agents to public measures and the effective and efficient absorption and implementation of the Recovery and Resilience Plan.
While the overall fiscal cost has been considerable, government policies have mitigated the short-term impact of the pandemic and the effects of permanent scars that would have undermined long-term sustainability.
