The decline in the economy in 2020 is slightly below that forecast by the Government (11.2%). As for the Q4’20 growth , it has turned out better than estimated: it has fallen by 9.1% year-on-year compared to a 9% drop in Q3’20. On a quarter-on-quarter basis, Spain’s GDP stands at +0.4% compared to +16.4% in Q3’20.
The contribution of domestic demand in Q4’20 declined less than expected by -6.3% y/y ( -7.2% previously), mainly driven by public spending (up 7.0% y/y and 3.8% in Q3’20) and the smaller drop in private consumption (-8.4% y/y vs. prior -10.5%). The foreign sector deteriorated again with a contribution of -2.7% in Q4’20 compared with -1.8% previously.
On the supply side, services gross value added contracted by 9.8% y/y (vs. prior -10.2% ). Growth in Education and Health stood out (+3.3% vs. +1.7% previously). The primary sector stands out positively: +8.7% compared to +3.7% previously. The industrial sector remains at -4.3% vs -4.4% previously.
The focus is currently on the impact of Covid-19’s third wave on Q1’21 GDP. The IMF has already downgraded growth forecasts for Spain in 2021 to 5.9% from the 7.2% it had predicted last October.