Bank of Spain: Economy is expected to contract by 16% to 21.8% in Q2

In its updated macroeconomic projections for the 2020-2022 period, the Bank of Spain said that it sees the economy shrinking between 16% and 21.8% in the second quarter. The bank further noted that recovery is expected in the second part of the year due to lifting of COVID-19 containment measures.

In its most likely scenario, the Bank of Spain said it expects the economy to contract by 9% to 11.6% in 2020. 

Additional takeaways

"Economy to shrink by up to 15.1% in 2020 in case of new COVID-19 outbreaks requiring additional, strict lockdowns."

"EU-harmonized inflation seen at -0.1% to -0.2% in 2020, in 2021 at 1.3% to 1.2%, in 2022 at 1.6% to 1.5% in most likely scenarios."

"Unemployment in 2020 is expected to rise to 18.1%-19.6% before recovering to 17.1%-17.4% in 2022."

Market reaction

This report doesn't seem to be having a significant impact on market sentiment. As of writing, the Euro Stoxx 50 Index was down 0.4% on the day at 3,370 points.