A waiter in virtually empty restaurant and bar in Madrid on Tuesday. – REUTERSPIXSpain's government forecast on Tuesday a worse-than-feared contraction of the coronavirus-battered economy this year, but a strong rebound in 2021 with a possible return to pre-pandemic levels in 2022.
Spain is experiencing a second wave of Covid-19 infections, with the highest caseload in Western Europe. For 2021, Calvino forecast GDP growth of 7.2%, from a previous estimate of 6.8%. But growth could go to as much as 9.8% next year thanks to the European Union recovery fund, according to a slide presentation next to the minister.The public deficit is expected to be worse than previously estimated, at 11.3%, before improving to 7.7% in 2021, which Budget Minister Maria Jesus Montero said would be achieved"with no cuts and no austerity.
Calvino said the government plans to issue less debt in 2020 than previously scheduled, promising more details in coming days and weeks. With the economy contracting, debt will stand at 118% of GDP at the end of this year, slightly up from a previous 115% estimate.If the minority government of Socialist Prime Minister Pedro Sanchez gets enough votes to pass it in parliament, it will be Spain's first budget since 2018, and the first full-year budget since 2016.