29. 03. 2021 the spanish economy and the covid - 19 crisis : assessment, outlook and challenges europa press informative breakfast pablo hernandez de cos governor * english translation of the original speech in spanish good morning, ladies and gentlemen. i would like to thank the organisers of this event for their kind invitation. i shall begin with a brief assessment of the period since the covid - 19 crisis broke. i shall then set out the banco de espana ’ s view on the outlook for the spanish economy. finally, i shall describe the medium - term economic policy challenges at the national and european level. taking stock of a year of pandemic : an unprecedented, persistent and uneven impact covid - 19 has caused a global economic recession of an intensity which, in most geographical areas, is unprecedented. the crisis is, moreover, proving very persistent : as of today the pre - pandemic levels of activity have not yet resumed in most countries. indeed, the successive waves of the pandemic have checked the recovery, particularly in the sectors most exposed to the restrictions. in spain, this impact is particularly marked. gdp declined by 10. 8 % in 2020 as a whole, a slump appreciably greater than that in the euro area ( - 6. 8 % ). at end - 2020, spanish gdp was still 8. 9 % below its pre - pandemic level, while this gap was 4. 9 percentage points ( pp ) in the euro area. several reasons account for this more pronounced impact in our country. one was the greater intensity of the pandemic initially, which led to harsher containment measures in spring last year. another was the greater weight of the sectors most affected by these measures. but the impact is also the outcome of the smaller size, on average, of our firms. smes are less adaptable to this shock, given that they usually face greater obstacles in gaining access to external financing ; their fixed costs are, in proportion to their turnover, higher ; and their levels of digitalisation are generally lower, which hampers their access to remote working. the first two editions of the banco de espana ’ s survey on business activity confirm these circumstances. the impact of the crisis has been very uneven, as the sectoral outlook evidences. thus, while effective social security registrations1 were, in february, 6. 8 % down on their prepandemic level, the figures were significantly worse in the sectors whose activity has most

' s monetary policy strategy, policy tools, and communication practices and will include outreach to businesses, community groups, academics, and other interested parties. as chairman powell has indicated, with labor market conditions close to maximum employment and inflation near our 2 percent objective, now is a good time to take stock of how the federal reserve formulates, conducts, and communicates monetary policy. as part of this outreach effort, the federal reserve system will hold a research conference june 4 - 5, 2019, hosted by the federal reserve bank of chicago and featuring outside speakers and panelists. the federal reserve board and reserve district banks will also be holding outreach and public events as we seek views from a wide range of interested parties. beginning in the summer of 2019, the fomc will draw on what it has learned from the conference and the system outreach events as it assesses possible ways in which the fed's strategy, tools, and communication practices might evolve to best achieve, on a sustained basis, the twin goals of maximum employment and price stability assigned to it by the congress. we anticipate making our findings public after the fomc concludes this review sometime in 2020. concluding thoughts the u. s. economy enters 2019 after a year of strong growth, with inflation near our 2 percent objective, and with the unemployment rate near 50 - year lows. that said, growth and growth prospects in other economies around the world have moderated somewhat in recent months, and overall financial conditions have tightened materially. these recent developments in the global economy and financial markets represent crosswinds to the u. s. economy. if these crosswinds are sustained, appropriate forward looking monetary policy should seek to offset them to keep the economy as close as possible to our dual - mandate objectives of maximum employment and price stability. as we have long said, monetary policy is not on a preset course. going forward, we need, i believe, to be cognizant of the balance we must strike between being forward looking and preemptive and ( 2 ) maximizing the odds of being right. for example, were models to predict a surge in inflation, a decision for preemptive hikes before the surge is evident in actual data would need to be balanced against the cost of the model being wrong. speaking for myself, i believe we can afford to be patient about assessing how to adjust our policy stance to achieve and sustain our dual - mandate objectives. we begin the year as close to our assigned