More dire predictions for Spain’s economy have surfaced in the past week, with the Organization for Economic Cooperation and Development (OECD), the European Commission and Spain’s Central Bank all projecting that by year-end the COVID-19 pandemic will have delivered a staggering blow to Spain’s overall production of goods and services.
The Paris-based OECD released its projections this week for the impact of the coronavirus crisis on the world’s top economies and predicted that Spain’s economy will shrink at the very least 11.1 percent this year — but the contraction is likely to worsen to 14.4 percent, if a second wave of COVID-19 grips Europe as many health experts believe will happen.
As it stands now, the OECD projects that Spain’s economic contraction will be the fourth worst of any economy among the 37 OECD member states in 2020, with just three of the G20 economies — those of France, Italy and the United Kingdom — performing more poorly. If a second wave of COVID-19 hits Europe this autumn or winter, the OECD says Spain’s economy is likely to finish the year as the hardest hit among the world’s largest economies.
Figures released by the European Commission’s Luxembourg-based Eurostat statistical research unit showed only slightly better performance, projecting Spain’s overall GDP will fall by 9.4 percent year-on-year, ballooning the government’s federal budget deficit by an additional 10.1 percent and pushing unemployment among Spaniards to 18.9 percent by the end of the year.
Presdent Pedro Sánchez told Congress this week that he intends to tackle the growing budget deficit by stimulating economic growth and increasing taxes, while avoiding any mention of spending cuts to balance the budget.
A slim ray of hope for the Spanish economy was offered by Eurostat, which projected a rebound of 7 percent GDP growth in 2021, but still leaving economic output more than 2 percent shy of the level of activity enjoyed prior to the coronavirus crisis at year-end 2019.
Spain’s own Central Bank released projections this week that see the nation’s economy shrinking anywhere from 9 to 11 percent this year. That contraction includes a record first-quarter drop in GDP of 5.2 percent and factors in an estimated dive in economic output of anywhere from 16 to 21.8 percent in the current quarter that ends June 30th.
On the bright side, the Spanish Central Bank says that come July economic output will return to growth, rebounding by an increase in the range of 16 to 19.3 percent during the third quarter, then slowing but still growing at 3 to 6.3 percent during the last quarter of 2020. Even so, the rebound for the second half of the year is factored into the bank’s projected overall 11 percent drop in GDP for this year.
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