What If There Is A V-Shaped Recovery?

Spain's governmentA view from Madrid town council's terrace

A glimmer of hope in the macro scenario managed by Banco Santander’s Research team. Compared to more somber estimates such as those from the Bank of Spain or BBVA Research, the experts at Santander Corporate & Investment do believe in a V-shaped recovery.

Banco Santander’s base scenario envisages a 5.2% fall in Spanish GDP this year compared with 8.3% growth in 2021.

These forecasts are in line with recent estimates by other institutions like BBVA Research that GDP in Spain could fall by around 8% in 2020 with a 5.7% rebound in 2021. Although they emphasize the lack of visibility, they do not expect our economy to recover the level of activity observed prior to the health crisis until 2022.

Meanwhile, and along similar gloomy lines, the Bank of Spain (BdE) said last Monday that it estimates an economic collapse of between 6.6% and 13.6% in 2020. Moreover, far from the rapid recovery that was talked about at the beginning of the health crisis, the recovery that the entity sees for 2021 will not be strong enough to offset the decline they expect this year.

Funcas, the Savings Banks’ Foundation, also presented its forecast table last week. This flags that Spanish GDP will fall by 7% this year, with a sharp contraction in the first half, and a rebound from the third quarter onwards. But, in any event, this will not make up for lost ground. This institution believes the improvement will continue in 2021, with GDP growth of 5.4%. However, this recovery will not be sufficient and “GDP will not recover its pre-crisis level until 2023”.