Spain Economic Outlook. Third Quarter 2021

Spain’s GDP growth estimate for 2021 is revised upwards up to 6.5%. Moving forward, the stronger progress of global activity, accumulated excess savings, the end of health restrictions and accommodative monetary and fiscal policies will boost GDP up to 7.0% in 2022.

Key points

• Key points:
• World’s GDP will expand by 6.3% in 2021 and by 4.7% in 2022, boosted by economic reopening, growing vaccination rates and fiscal and monetary stimuli. Faster activity growth has gone hand in hand with surprisingly high inflation.
• In Spain, GDP growth estimate for 2021 is revised upwards up to 6.5% as a consequence of a better than expected first quarter and a bigger expansion in 2Q21 than forecasted three months ago.
• The end of the alert state, the easing of health restrictions, and the progress of vaccination, among others, have enabled a faster recovery of private consumption, mainly in services.
• In 2022, economic growth could reach 7.0%. The containment of the pandemic, the disbursement of accumulated savings by households, the arrival of NGEU funds, expansionary measures by the ECB as well as a high unused productive capacity would be behind the upturn.
• In terms of risks, the successful control of the pandemic could mean an upwards bias on forecasts in the short term. Regarding the medium term, the direction of biases will depend on the reforms implemented in the next few months and the speedy and efficient execution of NGEU funds.

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