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Spain’s GDP may drop as much as 13.6% in 2020
22 April 2020 |


Faced with the uncertainty as to the duration of the confinement period and impact caused by the Covid-19 pandemic, the Banco de España (Bank of Spain) draws different scenarios for the economic results in 2020. One of those scenarios has the country’s GDP falling up to 13.6%.

This is the worst scenario, which assumes a 12 week confinement period and an incomplete normalisation until the end of the year, especially in the hotel and leisure segments, that is, taking into consideration «a greater persistence of the effects after the confinement period is over», it can be read in the Bank of Spain’s latest report released this Monday.

Another dark scenario is the one that predicts an almost full normalisation, but only during the fourth quarter of the year and a duration for the circulation restrictions of up to 8 weeks. Under these conditions, the economy might decrease 8.7%.

These two macro-economic projections from the Bank of Spain are worse than the one advanced by the International Monetary Fund last week, which predicted an 8% drop in the Spanish GDP. However, there is a scenario which shows a smaller drop for the economy.

If the state of alarm within the country reaches 8 weeks and if it is possible to normalise the economy «almost fully» after the confinement period, especially «the sectors of the economy where the social interaction plays the most important roles, such as hotels, restaurants and leisure, which are also the most exposed to tourism», the country’s GDP might fall 6.6%.

For the Bank of Spain, these results «point towards GDP falls unprecedented in recent history, although its scope is contingent upon the initial premises, over which there is much uncertainty». Among the main factors which might influence the recovery in the short term is the «sanitary risk perception in the coming months and the ability to restart the productive fabric which was most affected by the current shutdown».

«For 2021, we are left hoping that the Spanish economy will recover a significant part, but not all of the activity flow and employment expected before the pandemic», mentioned the Bank of Spain. According to data from the IMF, this recovery will be around 4.3%.