It’s believed recent developments in the way the Covid-19 pandemic is playing out could force the Spanish government to update its economic forecasts

While a May projection that Madrid sent to Brussels envisioned a 9.2% drop in economic output in 2020, the Bank of Spain has now released a more pessimistic outlook that places the decline somewhere between 10.5% and 12.6%.

This is down from the central bank’s own previous forecast, which had expected gross domestic product (GDP) to drop by 9% to 11.6%.

Although the end of the lockdown in Spain had created hopes of a strong recovery, fresh coronavirus outbreaks and travel restrictions imposed in late July put the brakes on economic activity, particularly in the hospitality industry.