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THE EURO ZONE

One thing is certain

In a gloomy press conference on Wednesday, the Bank of Spain lowered the already-low expectations about the pace of Spain's economic recovery from Covid, on the back of a disappointing third quarter. The predictions for post-Covid GDP contraction, unemployment and debt levels were bad enough in the first place, but the latest don't see Spain returning to economic "normality" before 2023. Even if that happens, it will be a return to a state of affairs that was already in need of substantial improvement, especially where unemployment rates were concerned.

To arrive at its latest forecasts, the Bank imagined two different scenarios playing out. In Scenario One (which is already happening), localised outbreaks would lead to regional, minimal restrictions of movement or confinement measures, which would mainly affect the hospitality sector. But in Scenario Two (which remains unlikely), a more widespread spike in cases might lead to a "wider lockdown", affecting several sectors and inflicting greater damage on the economy.

In the first case, the Bank predicts Spain's GDP contracting 10.5% this year, a figure which rises to 12.6% in Scenario Two. Both are worse than its previous forecast, released in May, of a contraction between 9% and 11.6% in 2020 - which was itself a downward revision of an earlier projection of 6%.

That the Bank of Spain is already on its third Covid-related forecast of the year highlights the huge amount of uncertainty inherent in the current situation, both epidemiologically and economically speaking. Although this doesn't exactly render such projections redundant or futile, it should remind us that they're no more than rough guidelines, capable only of giving an approximate idea of how Covid and the resulting confinement measures will affect Spain in the medium-to-long term.

The Bank admitted as much itself, when it said in a release this week that its forecasts are "highly dependent on epidemiological developments, in respect of which there remains a high degree of uncertainty". In other words, there's a possible Scenario Three, which the Bank hasn't modelled for and implied that it can't model for at this time. Which is somewhat odd, given that the dreaded third possibility doesn't need to be imagined: it was our reality back in March and April and it's called "total lockdown".

Despite their provisional nature, the latest GDP forecasts do show one thing very clearly: that to avoid further economic damage, Spain's Socialist-led government must do all it can to avoid a second nationwide quarantine. Despite temporarily slowing the spread of a virus, countrywide-lockdowns, as we've seen here and elsewhere, are extremely damaging - not only economically and socially, but also to people's mental and physical wellbeing. Spain can't afford - in any sense of that word - another one. That's the only certainty we can take from a very uncertain set of statistics.