Pablo Hernández de Cos: The Spanish economy and the Covid-19 crisis - assessment, outlook and challenges

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the Europa Press informative breakfast, 29 March 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning, ladies and gentlemen.

I would like to thank the organisers of this event for their kind invitation. I shall begin with a brief assessment of the period since the COVID-19 crisis broke. I shall then set out theBanco de España's view on the outlook for the Spanish economy. Finally, I shall describe the medium-term economic policy challenges at the national and European level.

Taking stock of a year of pandemic: an unprecedented, persistent and uneven impact

COVID-19 has caused a global economic recession of an intensity which, in most geographical areas, is unprecedented.

The crisis is, moreover, proving very persistent: as of today the pre-pandemic levels of activity have not yet resumed in most countries. Indeed, the successive waves of the pandemic have checked the recovery, particularly in the sectors most exposed to the restrictions.

In Spain, this impact is particularly marked. GDP declined by 10.8% in 2020 as a whole, a slump appreciably greater than that in the euro area (-6.8%). At end-2020, Spanish GDP was still 8.9% below its pre-pandemic level, while this gap was 4.9 percentage points (pp) in the euro area.