Spain’s pandemic-hit economy suffers steepest drop on record

Spain’s gross domestic product plunged 11 percent last year, data from the National Statistics Institute showed on Friday. That’s more than the economy shrank over the five years during and after the global financial crisis.

Historians said the nation’s economy marked the steepest drop since Spain’s 1936-39 civil war.

Statistics by the Funcas think tank showed that the crucial tourism sector accounted for just five percent of Spain’s GDP (compared with 12 percent in 2019), as the coronavirus pandemic crippled global travel demand.

Agriculture was the only economic sector to expand, growing by 4.7 percent over 2020. Public spending increased by 4.5 percent – its highest rate since 2008 – while private consumption dropped by 12.4 percent.

The introduction by the Spanish government of one of Europe’s toughest lockdowns between March and June led to a 17.9 percent second-quarter plunge in economic activity. There was a modest recovery in the final three months, however, when higher spending boosted GDP by 0.4 percent from the previous quarter. 

The government projects a 7.2 percent GDP rebound this year, while market analysts have cut their consensus from 6.5 percent to 6.3 percent.

The International Monetary Fund has also lowered its outlook to 5.9 percent, having warned that the eurozone’s recovery is slipping behind those of other advanced economies, including the United States and Japan.

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