The International Monetary Fund (IMF) has published its conclusions following the review of Spain’s economy under Article IV that governs member states. The team led by Andrea Schaechter, head of the mission for Spain, projects an annual loss of real GDP production of 12.8% in 2020, unchanged when compared with what was already estimated at the end of June.

“Spain has suffered the deepest blow in advanced economies,” Schaechter acknowledged at her press conference. “It will take years to recover and we do not see Spain recovering its pre-covid levels until at least 2023,” she added. In this regard, the head of the mission indicated that the country will not see sustainable growth in which unemployment will also be constantly reduced, until 2022.

However, for next year real GDP could grow by 7.2%, an improvement of almost one percentage point compared to what was announced three months ago, underpinned by the use of the European Union Recovery and Resilience Mechanism and its trust building effects. Of course, once again, Schaechter claried that the potential impact of these funds “will depend on how quickly they are distributed” as well as the effectiveness and conciseness with which they are used.

The document presented by the mission for Spain highlights how the impact of the covid-19 pandemic has been particularly serious for the country. In the rst six months of the year, the Spanish economy suffered the steepest drop in GDP amongst the large advanced economies, so keeping the second wave of infections under control will be critical forthe economic outlook.

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