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Spain's PM Sanchez says economic output rose 18% in second quarter

MADRID (Reuters) - Spanish economic output rose a record 18% in the second quarter of 2021 compared with the same period in the previous year, Prime Minister Pedro Sanchez said on Monday.

FILE PHOTO: People shop at a store, amid the coronavirus disease (COVID-19) outbreak, in Madrid, Spain, July 31, 2020. REUTERS/Javier Barbancho

“We have a budding economic recovery,” Sanchez told Cadena SER radio.

“In the quarter that is about to end, we will have gross domestic product 18% higher year-on-year compared with the second quarter of the previous year,” he said.

The comparison is with a period in which widespread lockdowns to contain the spread of the coronavirus strangled the euro zone’s fourth-largest economy, sending output down 21.6%.

In the last few days, the government has been saying that quarter-on-quarter growth could be between 1.6% and 1.7%. The second-quarter data will be released in late July.

Restrictions on movement devastated Spain’s tourism industry, which had accounted for around 12% of the economy before the pandemic, and dragged down factory activity and private consumption.

The economy recovered in the third quarter on a quarter-on-quarter basis but still contracted 8.6% annually. Overall, there was a record GDP contraction of 10.8% in 2020.

The recovery cooled again at the end of 2020 and the beginning of 2021 due to new restrictions to tackle the second and third waves of COVID-19. Bad weather also contributed to the GDP slowdown.

Data since the end of March has indicated a robust economic recovery underway, which has led to upward revisions of growth. The Bank of Spain now estimates that GDP will grow 6.2% this year.

The government’s official growth forecast for the year is 6.5%, which is tied to the progress of the COVID-19 vaccination campaign and the arrival of European recovery funds.

Reporting by Inti Landauro and Belén Carreño; Editing by Inti Landauro and Paul Simao