Published on Thursday, March 3, 2022

Spain | Crisis and recovery of Spanish economy after two years of COVID-19

This Observatory assesses the factors explaining the behavior of the Spanish economy between the first quarter of 2020 and the last quarter of 2021, and estimates the structural shocks behind the growth of GDP per working-age person (WAP), the GDP deflator and real wages.

Key points

  • Key points:
  • Despite the strong recovery of the Spanish economy in the second half of 2021, GDP per WAP stood in the fourth quarter of 2021 still 4.6% below its level in 4Q2019.
  • The recovery in activity during 2021 is mainly explained by structural demand factors, whose contribution in the last three quarters was 92% percent of year-on-year GDP growth, compared to 8% of supply shocks.
  • On the supply side, the recovery of total factor productivity in 2Q2021 seems to have been a one-off event, which did not continue in the second half of 2021. However, wage margins, which had been detracting several points of growth in previous quarters, reduced their negative contribution in the second half of 2021.
  • With regard to structural demand factors, the contribution of those linked to external demand, to the improvement in private consumption and investment, and to credit stand out.
  • The two years of the pandemic are characterized by low variations in vacancies and in the unemployment rate compared to previous crises. The vacancy/unemployment ratio has made a round trip, with decreases in 2020 and increases in 2021, until returning in the last quarter to a level that shows a tightening of the labor market slightly higher than that observed in 4Q2019.

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