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S&P deals another blow to Spain: its forecast of a fall in GDP worsens again to 11.3%

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The credit rating agency S&P has dealt another blow to Spain. It has done so by worsening, for the sixth time in a row so far in 2020, its forecasts for the Spanish economy due to the worsening of the coronavirus pandemic and outbreaks, so that it now estimates that the Gross Domestic Product (GDP) will contract by 11.3% this year (in June it predicted that the decrease would be 9.8%). This forecast collides with the improvement it has made in its forecasts for countries such as Germany, France, Italy and Holland.

In fact, as can be seen from a report published this Thursday by S&P, Spain is the only Old Continent country that has experienced a downward revision. He has done it after 'punishing' the country revising their outlook on the rating downward from 'stable' to 'negative' due to the economic effects of Covid-19 and for not having been able to approve budgets since 2018. However, it kept the note at 'A'.

Now, when it comes to GDP estimates, for Germany, the 'European locomotive', is now in a contraction of 5.4% in 2020, down from 6.2% estimated in June. Also, according to the agency, France's economy will fall by 9%, compared to 9.5% previously, and Italy will see a drop of 8.9%, when the forecast three months ago was 9.5%.

It has also improved the estimate for the Netherlands, which according to S&P will see its GDP fall by 5.2% this year, while three months ago the forecast was for a fall of 5.9%. And the estimate for Belgium has also been improved by three tenths, to 7.6%. For its part, outside the European Union, the rating agency has decided to revise downward the estimates of decline for United Kingdom up 9.7%, compared to 8.1% previously, and has improved those of Switzerland, down to a decrease of 4.3%, which represents an improvement of two points.

BETTER FORECASTS FOR SPAIN … IN 2021

Regarding 2021, S&P has improved the growth forecast for Spain to 8.2%, from the 6.8% it estimated in June. For 2022, the estimate has been placed at 4.3%, five tenths more, and for 2023, at 2.3%, three tenths less.

Regarding the unemployment rate, the risk rating agency considers that Spain will close this year with a 16% unemployment, while in June it expected a rate of 17.6%. On the other hand, by 2021 the figure has worsened by half a point, to 17.5%. The economy will not approach the unemployment levels at which 2019 (14.1%) closed until 2023, when it reaches 14.3%.

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