Spain’s GDP fell slightly less than expected in 2020

Spain's pandemic-hit economy shrank by 10.8 percent in 2020, a slightly less severe contraction than previously reported, official data showed.

waiter in Spain

The INE National Statistics Office had previously estimated an 11 percent fall last year.

The Spanish economy has been one of the worst-hit in the eurozone, with its key tourism industry battered by the coronavirus restrictions.

The gross domestic product (GDP) was flat in the fourth quarter compared to the previous three-month period, according to the INE, which had previously estimated 0.4 percent growth.

That followed a 17.1 percent quarterly jump in the third quarter which was slightly higher than a previous estimate.

Between March and June 2020, Spain imposed one of Europe’s toughest lockdowns, confining the population to their homes for all but essential activities and shutting down many industries, hitting the economy hard.

Economic activity rebounded during the summer but fresh restrictions imposed to curb a second wave of infections once again cooled the economy, especially tourism.

The Bank of Spain on Tuesday, March 23rd, lowered its forecast for economic growth in 2021 to 6.0 percent down from the 6.8 percent predicted in December.

It blamed the change on new virus restrictions on social life and a slower-than-expected rollout of the European Union’s recovery funds for the bloc’s coronavirus-battered economies.

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Spain posts strong growth for 2022 despite inflation

Spain's economy grew faster than expected in 2022 as strong domestic consumption and a surge in investement offset worries over high inflation, officials figures showed Friday.

Spain posts strong growth for 2022 despite inflation

Despite soaring energy and food prices fuelled by the war in Ukraine, the economy grew by 5.5 percent, similar to the previous year and well above the government’s target of 4.4 percent, according to an initial estimate by the National Statistics Institute (INE).

“Despite the prophets of doom, we have strong economic growth, the lowest inflation in Europe and record employment,” tweeted Prime Minister Pedro S├ínchez, saying the figures showed “the strength and resilience of the Spanish economy”.

The INE said the growth figures reflected a strong performance in spring when gross domestic product rose by 2.2 percent between April and June thanks to steady household consumption.

That boost offset a sharp slowing of activity towards the end of the year – when GDP grew by just 0.2 percent in the third and fourth quarters – in a context of high consumer prices that affected economies across Europe.

In Spain, inflation reached an average of 8.4 percent last year, peaking at 10.8 percent in July, INE figures showed.

But it has slowed in recent months, falling to 5.7 percent at the end of December, one of the lowest figures in the Eurozone.

Spain “has demonstrated a notable resilience” in a “very difficult” context, Economy Minister Nadia Calvino said earlier this week, noting its growth levels were well above the European average, estimated by Brussels to be 3.3 percent.

“We are starting 2023 on a good footing.”

The government believes the dynamic will enable Spain to maintain solid growth this year although its target of 2.1 percent is far lower than the figure for 2022.

Even so, the prediction is far more optimistic than that of institutions like the IMF which sees the economy growing by 1.1 percent.

Among Western economies, Spain was one of the worst hit by the economic fallout of the pandemic, with its GDP collapsing by 10.8 percent in 2020, largely due to its heavy dependence on tourism.

The IMF believes Spanish growth will only reach pre-pandemic levels in 2024.