Spanish economy to shrink by 9.5% to 12.5% in 2020

The Bank of Spain on Monday adjusted its predictions downward for the effects of the coronavirus on the Spanish economy during 2020.

The Bank's governor Pablo Hernandez de Cos explained that in a best case scenario, Spain would see between 9.5 percent and 12.5 percent knocked off its GDP in the current year -- three points more than the bank's initial prediction made a month ago.

Hernandez de Cos pointed out that Spain's economy shrank by 5.2 percent in the first quarter and advised that by the end of the year, the effect of the coronavirus on the economy would be "the worst ever in times of peace."

He also warned that the crisis would be "longer than at first anticipated and could cause persistent damage" to the economy, which he expects to grow by between 6.1 and 8.5 percent in 2021.

He said that fiscal measures need to be maintained to help companies through the crisis, explaining that although the cost would be "very high," there was "no simple alternative to an expansion of the budget." He warned that failure to do so "would increase the risk that economic growth will suffer more lasting damage."

Hernandez de Cos appealed for a "political agreement" between Spain's parties in order to pass the "structural reforms" that would be needed to recover from the effects of the virus.