Spain Economic Forecast

Spain Economic Outlook

June 2, 2020

On the heels of the worst downturn on record in Q1, caused by the nationwide lockdown announced in mid-March to curb Covid-19’s spread, the economy is set to reel even further in Q2 as the full brunt of containment measures is felt. In April, retail sales were decimated due to the closure of businesses, while the services PMI sank to a record low as output and new orders collapsed at unprecedented rates. The manufacturing PMI also plummeted, though less than that seen during the Great Recession. On a somewhat positive note, job losses eased in April and employment began to slowly recover through mid-May. Moreover, the gradual easing of restrictions nationwide came into full swing later in the month, with inbound tourism set to be restored in July—giving some hope to the battered industry. On the policy front, on 29 May, the government approved the creation of a monthly basic income scheme ranging from EUR 462–EUR 1,105 for poor households.

Spain Economic Growth

The economy is poised to suffer a severe slump this year on the Covid-19 shock. Higher unemployment and income losses will hammer household spending; elevated uncertainty and weak demand are set to hamper investment; and exports will collapse on the ailing tourism sector. The drastic deterioration in public finances darkens the outlook. Our panel forecasts the economy to shrink 9.7% in 2020, which is down 1.7 percentage points from last month’s forecast, before growing 6.3% in 2021.

Spain Economy Data

2015 2016 2017 2018 2019
Population (million)46.446.446.446.446.7
GDP per capita (EUR)23,21924,00625,03625,88226,692
GDP (EUR bn)1,0781,1141,1621,2021,245
Economic Growth (GDP, annual variation in %)3.83.02.92.42.0
Domestic Demand (annual variation in %)4.12.13.12.71.5
Consumption (annual variation in %)2.92.63.01.81.1
Investment (annual variation in %)4.92.45.95.31.8
Exports (G&S, annual variation in %)4.35.45.62.22.6
Imports (G&S, annual variation in %)5.12.66.63.31.2
Industrial Production (annual variation in %)3.21.93.20.30.7
Retail Sales (annual variation in %)4.23.90.70.82.4
Unemployment Rate22.119.617.215.314.1
Fiscal Balance (% of GDP)-5.2-4.3-3.0-2.5-2.8
Public Debt (% of GDP)99.399.298.697.695.5
Inflation Rate (HICP, annual variation in %, eop)-0.11.41.21.20.9
Inflation Rate (HICP, annual variation in %)-0.6-0.32.01.70.8
Inflation (PPI, annual variation in %)-2.1-3.14.43.0-0.4
Policy Interest Rate (%)-  -  -  -  -  
Stock Market (annual variation in %)-7.2-2.07.4-15.011.8
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)2.03.22.71.92.0
Current Account Balance (EUR bn)21.835.431.123.324.9
Trade Balance (EUR billion)-24.2-18.8-24.7-33.8-32.0

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Spain Facts

Value Change Date
Bond Yield0.465.62 %Dec 31
Exchange Rate1.120.65 %Dec 31

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