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FILE PHOTO: The silhouette of an effigy is seen outside Argentina’s National Congress as senators debate inside during a special session on debating a debt renegotiation bill exterior, in Buenos Aires, Argentina, on February 5, 2020. REUTERS / Agustin Marcarian / File photo

MADRID (Reuters) – Spain’s economy has grown by more than 10% so far in the third quarter following a record decline in the previous quarter due to the impact of the coronavirus pandemic, the minister of Economy Nadia Calvino.

The Spanish economy was one of the hardest hit by the pandemic and subsequent lockdowns in Europe, posting an 18.5% contraction in April-June from the previous quarter as non-core activities came to a halt during the most of the period. It had contracted 5.2% in the first quarter.

“With all care and caution, we can expect growth of more than 10% in the third quarter of the year,” Calvino said at a financial event held in the city of Santander, in the north of the country.

Calvino’s growth estimate, which also said the labor market is rebounding, is slightly more cautious than that of budget watchdog AIReF, which last week raised its GDP expansion forecast for the third quarter at 15.2%.

To fix the ravaged economy, the Spanish government is counting on the 140 billion euros ($ 167 billion) it is expected to receive from the European Union’s stimulus fund, about half of which is in non-repayable grants.

“A plan which the government estimates will increase our country’s economic growth by more than two percentage points in the long term,” Prime Minister Pedro Sanchez said at a conference in Madrid.

Spain’s central bank said the economy could contract 9% to 11.6% in 2020, not ruling out an even steeper contraction of 15.1% due to the possibility of a new wave of coronavirus.

Reporting by Jesús Aguado, Emma Pinedo, Belen Carreño and Inti Landauro; edited by Andrei Khalip and Mark Heinrich