The Bank Of Spain has released its latest report on the country’s economic outlook, which shows a slight improvement on their previous report at the beginning of the year.
The report forecast a rise from 6% to 6.2% in Spanish economic growth in 2021 and a rise from 5.3% to 5.8% in 2022 meaning that the economy will have returned to pre-crisis levels towards the end of next year.
The economic recovery is partly due to the success of the governments vaccination drive, which has lowered the infection rate and allowing business activity to return to near normal.
Spain’s economy was the hardest hit by the pandemic in the EU, contracting by 10.8% in 2020.
The good economic news was boosted by the arrival in Madrid last week of the EU Commisioner, Ursula Von der Leyen,who came with the green light for Spains ´portion of the EU´s Recovery Plan.
The 672.5 billion Euro Plan will see Spain and Italy as the principal beneficiaries – Spain´s portion totals some 140 billion Euros which is split between grants and soft loans.
The Bank of Spain estimates that Spain’s GDP will have improved by 1.8 percentage points by 2023 thanks to the European funds.
The Spanish element of the Recovery Plan is based on four pillars: ecological transition, digital transformation, gender equality and social and territorial cohesion.
Measures include the digitalisation of more than one million SMEs, training of more than 2.6 million people in digital skills, extension of broadband to 100% of the population, effective roll out of 5G, promotion of 165 sustainable tourist destinations, rehabilitation of more than one million homes, reaching a fleet of 250,000 electric vehicles, deployment of more than 100,000 recharging points and the completion of the Atlantic and Mediterranean rail corridors.
The EU has approved the first tranch of 212 investments and reforms that Spain has already started and some 19 billion Euros in 2021 is being released, of which 9 billion are advance payments and 10 billion covering costs already met.
According to the Commission’s report, Spain has put in place an adequate structure to implement the Plan and ensure its effective monitoring to oversee the implementation of the projects as well monitor “to detect and correct corruption, fraud or conflicts of interest”.
The Spanish Prime Minister, Pedro Sanchez hailed the plan saying that Spain wants ” to be a modern country and a leader in major transformations” and that the “Plan represents the largest investment and reform effort in our country since it joined the former European Economic Community 35 years ago.”
Von der Leyen said “This plan will deeply transform Spain’s economy, make it greener, more digital, more resilient. We have endorsed this plan because it is ambitious, far-sighted and will help build a better future for the Spanish people.”
There are high expectations about the plans and the benefits that will come from implementation, with an emphasis on green and digital transition.
Prime Minister Pedro Sánchez will also meet with the heads of the country´s 17 autonomous communities to discuss the implementation of the plan.