The Spanish economy fell by 11% in 2020 as a result of the pandemic’s impact on activity, an unprecedented slump in peacetime. It is also the largest annual contraction since statistical data has been recorded, ending six consecutive years of growth, according to the National Institute of Statistics (INE). The decline in the economy in 2020 is slightly below that forecast by the Government (11.2%). As for the Q4’20 growth , it has turned out better than estimated: it has fallen by 9.1% year-on-year compared to a 9% drop in Q3’20. On a quarter-on-quarter basis, Spain’s GDP stands at +0.4% compared to +16.4% in Q3’20.
The contribution of domestic demand in Q4’20 declined less than expected by -6.3% y/y ( -7.2% previously), mainly driven by public spending (up 7.0% y/y and 3.8% in Q3’20) and the smaller drop in private consumption (-8.4% y/y vs. prior -10.5%). The foreign sector deteriorated again with a contribution of -2.7% in Q4’20 compared with -1.8% previously.
On the supply side, services gross value added contracted by 9.8% y/y (vs. prior -10.2% ). Growth in Education and Health stood out (+3.3% vs. +1.7% previously). The primary sector stands out positively: +8.7% compared to +3.7% previously. The industrial sector remains at -4.3% vs -4.4% previously.
The focus is currently on the impact of Covid-19’s third wave on Q1’21 GDP. The IMF has already downgraded growth forecasts for Spain in 2021 to 5.9% from the 7.2% it had predicted last October.