Spain sees worse-than-feared contraction in 2020, …

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MADRID, Oct 6 (Reuters) – Spain’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.

Economy Minister Nadia Calvino told a news conference the government now foresees GDP to fall 11.2 % in 2020, down from a previous prediction, in May, for a 9.2% slump.

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%. Growth could go to as much as 9.8% next year thanks to the European Union recovery fund, according to a presentation.

The public deficit is expected to be worse than previously estimated, at 11.3%, before improving to 7.7% in 2021.

Unemployment would reach 17.1% this year and 16.9% next year, not quite as bad as previous forecasts, according to the presentation.

Calvino said the government plans to issue less debt in 2020 than previously scheduled. (Reporting by Nathan Allen, Belen Carreno, Inti Landauro; Writing by Ingrid Melander; Editing by Andrew Cawthorne)

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