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Published on Tuesday, February 9, 2021

Spain | Economic outlook at the start of 2021

Short-term uncertainties have not changed the expectation that 2021 will be a year of recovery in which the Spanish economy, the Eurozone and the United States will see improvements.

Key points

  • Key points:
  • There are important qualifications that can and should be applied to that main message as regards the outlook for 2021. There will not be a full recovery this year. After falling 11% in 2020, GDP growth in Spain of around 5.5%-as predicted by BBVA Research-will leave the economy still far short of where it was at the end of 2019.
  • What can be done to reduce this uncertainty, bring the recovery forward and make it stronger? In the short term, apart from continuing selective measures to prevent infection, the most effective policy for accelerating recovery is to prioritize vaccination, which must be rapid, effective and on a large scale.
  • While mass vaccination is being carried out, health security and economic activity must be maximized simultaneously. In sectors where restrictions are essential for health reasons, additional aid is needed right away for viable enterprises whose survival is at risk until activity in their sectors returns to normal.
  • Recovery will depend on the ability to leverage European Next Generation EU funds, on reforms, on the restructuring of the production framework and on economic policies, as I have said in previous articles. But the priority now is to overcome the pandemic as soon as possible by accelerating vaccination and preserving the production framework efficiently.

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