After the steep decline in 2020, GDP is projected to grow by 5% in 2021 and 4% in 2022. Localised restrictions to address COVID-19 outbreaks and continued disruption to travel and tourism will be a drag on the recovery until an effective vaccine is widely deployed. High uncertainty and adverse labour market conditions will weigh on private consumption. As external demand growth recovers gradually, exports will contribute to growth in 2021 22. The unemployment rate is projected to remain high.
The current flexible approach of adapting policies to help firms and workers to the evolution of the pandemic should be maintained, by targeting fiscal support to those most affected by the crisis. While the extension of short-time work schemes will support the hard-hit sectors, this should be accompanied by more training and stronger active labour market policies to prepare for the reallocation of resources across firms and sectors. The national recovery plan has a strong focus on digital and green investment objectives, which should be achieved through ambitious structural reforms to boost productivity, create jobs and improve environmental outcomes.
The Spanish economy continues its strong and balanced growth. Strong employment gains have reduced unemployment and provided support to households. A wide range of structural reforms (discussed in detail in the 2017 Economic Survey of Spain) has contributed to the recovery. The correction of imbalances continues steadily, with a higher share of trade in gross value added, lower private debt and a healthier financial system. Maintaining momentum for structural reforms, notably in labour and product markets, is key to improve the resilience of the Spanish economy to future shocks.