© Reuters. The coronavirus disease (COVID-19) outbreak, in Madrid
By Belén Carreño and Nathan Allen
MADRID (Reuters) – Spain’s pandemic-hit economy recorded its steepest contraction on record in 2020, and increasingly tough COVID-19 restrictions imposed since the turn of the year suggest that expectations of a strong rebound in 2021 may have to be scaled back.
Gross domestic product fell 11% last year, data from the National Statistics Institute (INE) showed on Friday, as revenues in the crucial tourism sector plummeted.
That was more than the economy shrank over the five years during and after the global financial crisis that began in 2008, and historians said it marked the steepest drop since Spain’s 1936-39 civil war.
There was a modest recovery in the final three months, when higher spending boosted GDP 0.4% from the previous quarter, outstripping the 1.5% drop expected by analysts polled by Reuters.
But since then a third wave of contagion has been spreading across Europe and, like many of its neighbours, Spain has tightened curbs on movement, imposing regional curfews and restricting business hours.
The government’s projects a 7.2% GDP rebound this year, above forecasts from markets analysts who last week cut their consensus to 6.3% from 6.5%.
The International Monetary Fund has trimmed its prediction to 5.9%, and warned that the euro zone’s recovery is slipping behind those of other advanced economies including the United States and Japan.
Over 2020, a year in which global travel was dramatically curtailed, tourism accounted for just 4%-5% of Spain’s GDP, according to estimates from Funcas analyst Maria Jesus Fernandez. That compares with a 12% share in 2019.
Agriculture was the only economic sector to expand, growing by 4.7%. Public spending grew 4.5%, its highest rate since 2008, while private consumption fell 12.4%, according to calculations by an INE official.
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.
That drove a 17.9% second-quarter slump in economic activity and, while the current lockdown allows people to circulate, many business activities have again been curtailed.
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