Spanish economy may have shrunk near 20% in second quarter, says central bank

FILE PHOTO: A woman walks past a Bank of Spain branch, during the coronavirus disease (COVID-19) outbreak, in the Andalusian capital of Seville, Spain, April 10, 2020. REUTERS/Marcelo del Pozo/File Photo

MADRID (Reuters) - Spain’s coronavirus-battered economy may have shrunk close to 20% in the second quarter from the previous quarter, in what would be the sharpest such decline on record, the Bank of Spain said on Thursday.

“The fall in Spanish GDP looks to have accelerated significantly in the second quarter to a range whose midpoint would be a decline of around 20% quarter-on-quarter,” it said as part of its quarterly economic report.

Earlier in June, the Spanish central bank said the impact of a lockdown that started in mid-March would be fully felt in the second quarter, with a contraction likely around 16%-21.8%.

On Tuesday, the Bank of Spain’s governor Pablo Hernandez de Cos said the economy would begin recovering in the second half and, in a best-case scenario, could grow 16% in the third quarter versus the previous three months.

In its report, the Spanish central bank reiterated on Thursday the economy could overall contract by 9%-11.6% in 2020, without ruling out an even sharper contraction of 15.1% due to the possibility of a new wave of coronavirus.

On Wednesday, the International Monetary Fund published a forecast of an 12.8% economic slump for Spain this year due to the coronavirus.

Reporting By Jesús Aguado and Emma Pinedo; Editing by Andrew Cawthorne