International Monetary Fund predicts major economic slump in Spain due to coronavirus crisis

CORONAVIRUS will push Spain into a major economic slump this year, the International Monetary Fund predicts.

The IMF has revised its forecast for Spanish economic growth in the second quarter and now expects an 8 per cent drop in GDP for 2020 and a six-point rise in unemployment to 20.8 per cent due to the ‘unprecedented crisis’ created by the Covid-19 pandemic.

It will not be until the end of the year that Spain’s GDP starts to recover, followed by a progressive rebound in 2021 of 4.3 per cent, the IMF said.

The Spanish government said this confirmed the thinking that the crisis, while “intense,” would not last long.

The Eurozone GDP will contract 7.5 per cent this year, according to the IMF’s World Economic Outlook. Italy, the European country worst hit by the pandemic, will suffer a 9.1 per cent drop in GDP.

In France the fall will be 7.2 per cent, and in Germany 7 per cent.

For next year however, the IMF says growth should be 4.7 per cent.

“In parts of Europe the outbreak has been as serious as in the Chinese province of Hubei,” the IMF document points out.

“Although essential to contain the virus, confinement and restrictions on movement are dealing a hard blow to economic activity.”

And while the report paints a much more optimistic economic picture for 2021, IMF chief economist and report coordinator Gita Gopinth refers to “a high level of uncertainty,” and makes it clear the forecasts are based on the premise the pandemic will start to disappear in the second half of the year.

Just three months ago the IMF put Spanish economic growth for 2020 at 1.6 per cent and at 1.3 per cent for the Eurozone.