Spain has already entered the expected year of the rebound. Government and research services unanimously agree that 2021 will be a year of robust growth. The key question, which will determine how long it will take to recover the pre-crisis levels, is how long the economy will be able to recover. BBVA Research experts cool short-term prospects for the third wave, but raise them in the medium term. In a report on the situation of Spain presented this Thursday they lower their expectations for this course by five tenths, much less optimistic than those of the Pedro Sánchez Executive: they calculate that GDP will grow by 5.5% in 2021, well below 9, 8% predicted by the Government —including European funds—, which has built the Budgets on the basis of income linked to this advance. However, they see a clearer horizon as the months go by, when vaccines do their immunizing work and infections subside: growth will be 7% in 2022.
Although in Spain mobility is not suffering as severe restrictions as months ago, the entity sees an additional negative effect in the bad moment of many of the key trading partners, with countries such as Germany, Belgium and the Netherlands extending confinements due to deterioration of its health indicators. A worsening of the activity in the whole of the euro area during the end of 2020 that they do not rule out will extend to the first part of this year and that can damage exports. “The effect of the restrictions adopted to prevent a further spread of Covid-19 and the exhaustion of some of the public demand policies are putting downward pressure on activity,” they warn from the entity.
Until now, almost all the forecasts, both from large international organizations such as the OECD and the IMF, as well as from analysis houses, placed the bulk of the rebound in this year, and predicted that it would lose strength in the following years until the rates growth rates gradually stabilize at more normal levels, abandoning the extreme volatility in which they now move. BBVA experts contradict this thesis: they believe that, given that the recovery is being “slower than expected” this year, the great acceleration will begin to be seen in the second part of 2021 “thanks to the positive impact of the progress in the process of vaccination, the implementation of new measures of fiscal and monetary impulse, and the high production capacity that is not used ”, and taking advantage of this inertia, it will take flight definitively in 2022, which will be the great year of the comeback for Spain, with an advance of GDP of 7%. “If we had to summarize the message of the report, we would say that 2021 and especially 2022 are the years of economic recovery,” said Rafael Doménech, head of Economic Analysis at BBVA Research.
For this recently ended 2020, the bank’s analysts set the fall at 11%, five tenths below its previous forecast, and very similar to the 11.2% expected by the Government. Behind the change is the surprising rebound in the third quarter, which shattered the most conservative numbers of all observers.
The next data that will serve to test the health of the Spanish economy will arrive on January 29 with the publication of the figures for the fourth quarter by the National Institute of Statistics. Both the Independent Authority for Fiscal Responsibility (Airef), as the economic vice-president Nadia Calviño, and above all, the Minister of Social Security, José Luis Escrivá, have made public forecasts of positive growth, relying above all on Social Security affiliations . BBVA, however, is betting on stagnation, with a Pyrrhic improvement of one or two tenths. Its report concludes that activity would have barely changed in the fourth quarter of 2020, penalized by a possible drop in private consumption and by a downward correction in investment offset by the strength of public consumption and exports.
The big risk, unsurprisingly, is still the health one. “There is uncertainty about when the level of herd immunity will be reached and if it will last over time,” say the economists. The first stages of the vaccination campaign have shown that the capacity to immunize the population is far from being homogeneous in Europe, “which would lead to an uneven recovery”, according to BBVA. On the other side of the balance, European funds will have a growing effect over time, of 1.5% of GDP on average per year according to his calculations, although he sees it necessary to detail the investments that will be carried out as soon as possible. “There is uncertainty about the speed with which the projects will be executed and what their consequences will be on the country’s growth capacity,” he warns.
Filomena’s negative impact
The effects of the storm Filomena can be seen in the numbers for the first quarter. In the data up to January 10, the bank has already detected a relevant decoupling of spending between Madrid and the rest of Spain that was not seen in November and December, because the capital has been particularly hit by the accumulation of snow , which has forced the closure of shops and communication channels. That could subtract a tenth of growth in the first quarter, although the consequences have not yet been quantified.