Spain’s economy contracted sharply by 11 percent in 2020 in one of the worst results of the eurozone with its key tourism sector battered by the Covid-19 pandemic.
Published on Friday by the National Statistics Institute, the figure was largely in line with the fall of 11.2 percent predicted by Spain’s government although the International Monetary Fund had seen a sharper contraction of 12.8 percent.
France has seen its economy shrink by 8.3 percent in 2020, Germany by 5.0 percent and the United States 3.5 percent.
“In 2020 as a whole, Spain’s economy contracted by 11 percent which will almost certainly be the worst performance of any eurozone economy,” said Jessica Hinds, an analyst at Capital Economists.
However in the fourth quarter, GDP nonetheless grew by 0.4 percent compared to the third, although it was far below its pre-crisis levels, showing a 9.1 percent fall on the same period in 2019.
“The unexpected rise in Spanish economic activity in the fourth quarter contrasts with the declines in GDP recorded in France and Austria, where restrictions were much stricter in the autumn,” Hinds said.
During the last three months of the year, household spending rose by 2.5 percent, which “presumably reflects the fact that non-essential retail was not closed in Spain,” she said.
“But Spain’s authorities are now tightening measures to curb the spread of the virus, which bodes ill for the first quarter.”
Miguel Cardoso, an economist at BBVA Research said it was too early to speak with any certainty about the outlook.
No recovery in sight
“It’s difficult to talk about any economic recovery at the moment. Health indicators are still showing a worrying deterioration,” he said in a note this week.
Spanish growth collapsed in early 2020 under the weight of one of the toughest lockdowns in the world which was exacerbated by a two-week shutdown of all non-essential activities.
The economy then rebounded strongly during the summer but activity soon slowed, particularly in the tourism sector, as infections crept up and new restrictions were imposed to combat the second wave.
Spain ended the year with more than half a million extra unemployed, including many from the tourism and hotel sector, while another 755,000 people were still benefitting from the government’s furlough scheme.
Earlier this month, the government extended the scheme until the end of May, the third such extension.
The country has been badly hit by the pandemic, suffering one of the highest infection rates in Europe, with more than 2.7 million cases and over 57,000 deaths.