The Bank of Spain in Madrid. | Vega Alonso del Val

Spain’s economic recovery slowed down in the fourth quarter, hit by supply chain bottlenecks, rising inflation and a surge of COVID-19 contagion, the central bank said yesterday, as it revised lower its growth forecasts for this year and next.

After a record 10.8% slump last year, the Bank of Spain now expects gross domestic product to expand 4.5% in 2021, down from its September estimate of 6.3%.

Growth should accelerate to 5.4% in 2022, when Spain is likely to feel the effect of European pandemic recovery funds, but also less than the previously expected 5.9%, it said.

Bank of Spain’s Chief Economist Oscar Arce said he expected Spain to only reach pre-pandemic output levels by the end of next year or early 2023.