Spain's gross domestic product (GDP) will contract 9.2% in 2020, Economy Minister Nadia Calvino said on Friday, as the coronavirus pandemic wrought havoc on the economy. GDP is expected to recover in 2021 and expand 6.8%, Calvino said.
The Bank of Spain expected an "asymmetric V-shape recovery, with the deepest decrease in the second quarter and then a strong and gradual recovery in the second half of the year," she said during a press conference. "Forecasts are prudent and consistent."
On Feb. 11, prior to the imposition of a nationwide lockdown to counter the pandemic, Calvino had forecast 2020 GDP growth at 1.6%.
The government also revised the 2020 deficit forecast to 10.34% and a 2020 debt to GDP ratio at 115.5%. This compared to a deficit goal of 1.8% of GDP given in February.
"This is the widest deficit since 2012 when Spain reached 10.7%," Budget Minister Maria Jesus Montero said during the same press conference.
Unemployment for 2020 was forecast to rise to 19%, easing to 17.2% in 2021. In February, the unemployment rate had been forecast to end 2020 at 13.6%.
Until the pandemic hit, the Spanish economy - the euro zone's fourth largest - had consistently outperformed much of Europe since it emerged from a five-year slump in 2013.
Spain has had one of the world's worst outbreaks with more than 24,000 COVID-19 fatalities and in mid-March imposed one of the strictest lockdowns, though officials are confident the worst has passed and started easing restrictions over the past few days and plans to further soften the lockdown gradually in May.