Brussels (Brussels Morning) Spain’s GDP dropped 11% last year according to National Statistics Institute (INE) data released on Friday, El País reported.
The slump, caused by restrictions imposed to control the coronavirus pandemic, is the steepest since the Spanish Civil War in the 1930s.
The home confinement measures imposed in the period between March and June almost caused the economy to ground to a halt, with GDP dropping 17.8% in the second quarter.
Economic output rebounded 16.4% in the third quarter, when restrictions were eased, but subsequent lockdowns curtailed growth in the final quarter of the year.
Predictions and expectations
According to the most optimistic forecasts, the Spanish economy will return to pre-pandemic levels at the end of 2022, with most experts expecting this will happen in the summer of 2023.
The Spanish government expects GDP to grow 7.2% this year without the effects of EU recovery funds. The country is to receive close to 30 billion euro from Brussels this year.
According to INE data, the services sector was hit the hardest last year, especially the hospitality industry. Tourism, which usually accounts for close to 14% of Spain’s GDP, saw international arrivals dropping to 20 million last year, in contrast with 85 million from the year before.
Lack of tourists caused many businesses in the sector to close, which impacted the labour market, especially in regions dependent on tourism.
In the first half of 2020, government spending was the main driver of economic activity, which is reflected in growth of public debt and deficit.
In an effort to cushion the blow of pandemic-induced restrictions, Spanish authorities introduced aid measures for businesses and households.
Their efforts kept the unemployment rate at 16.1% last year because furloughed workers do not count as unemployed. The authorities recently extended the scheme until the end of May.