GDP Rise of 6.1% in 2021 And that Spain will be the Euro Country that will Recover Later
Mapfre Economics foresees a growth of the Spanish GDP of 6.1% in its base scenario for this year and 6.3% for 2022, although the activity level of 2019 will not recover until, at least, the last quarter of the year that it comes, being the euro country that will take the longest to recover.
This is stated in the report ‘Economic and sectoral panorama 2021: perspectives towards the first quarter’, prepared by Mapfre Economics and published by the Mapfre Foundation, which underlines that the fiscal aid package approved in Brussels will be key, since the use of funds of the EU will contribute two percentage points each year to growth between 2021 and 2023.
With an estimate of a GDP drop of 11.3% in fiscal year 2020, Mapfre’s forecasts suggest that domestic demand will contribute 4.9 points to growth this year and external demand will contribute 1.3 points, while in 2022, the internal one would contribute 5.3 points and the external one, 0.9 percentage points.
Likewise, it estimates that the unemployment rate will rise to 17.9% at the end of the last quarter of this year and will fall to 16.4% in 2021, while inflation will be 1.1% and 0.8%, respectively.
The Mapfre economists emphasize that for 2021 the scenario is “fraught with uncertainty”, especially due to the recurrence of waves of infections until a generalized immunity of the population is achieved, which may still take “a few quarters”, while point out that uncertainty persists regarding the tourism, hospitality and leisure sectors, and about all those that involve physical presence.
Impact of European funds and recovery at the end of 2022
With an estimate that the use of European Union funds, Next Generation EU, will have an impact of up to 2 percentage points of GDP in each year from 2021 to 2023, in the baseline scenario considered in this report a recovery of the Spanish economy of 6.1% in 2021 and 6.3% in 2022.
In this way, only until the fourth quarter of 2022 will the Spanish economy return to the GDP level of the last quarter of 2019, two quarters later than the average of the Eurozone economies, according to the study.
The risks for the Spanish economy cited by Mapfre stem from the possible outbreaks of contagion that periodically force new restrictions in 2021, and warns that there could be a rebound in business insolvencies, bank delinquencies and a rise in unemployment that, for now, it is contained thanks to temporary employment aid (ERTEs) which, according to Mapfre, will be extended.
In addition, it warns that some of the insolvencies, mainly in the hotel and tourist transport sectors, may leave a somewhat more lasting damage, which translates into a reduction in the tourist offer, a “key” sector in Spain.
The Mapfre research service believes that the world economy, for which it predicts a 4.5% rebound on average in 2021, will return to normal in the middle of the third quarter of this year and that, as a whole, the world will recover what was lost in the crisis in mid-2022.
For the euro area, he expects a growth of 5% in 2021 and 4.7% in 2022, considering that in the second half of 2021 European funds will begin to be activated and there will also be a greater proportion of the population immunized.
It cites as risks the pandemic outbreaks and possible new restrictions, the slowness in normalizing activity due to a vaccination program that takes longer than expected, the recovery of exports that depends on the activity levels of its trading partners and Brexit, which “It will cause, to a greater or lesser extent, problems in trade and in production chains.”
Finally, the United States considers that it will recover the levels of GDP prior to the pandemic already at the end of this year, with a growth of 3.9% in 2021, above the 3.3% estimated in the previous quarter, and the 2.8% in 2022. Despite the growing tensions after