BBVA Research raised Spain’s growth forecast for this year by 0.2 points to 2.6 per cent, while keeping next year’s projection at 2.1 per cent. The bank’s October outlook warns that higher oil and gas costs could slow activity and prolong inflation. It forecasts inflation of 3.6 per cent this year and 3.2 per cent next year, with private consumption still expanding.
BBVA Research, the economic research arm of Spanish bank BBVA, raised its growth forecast for Spain by 0.2 points to 2.6 per cent for this year. Its October outlook keeps next year’s forecast at 2.1 per cent. Consumption, tourism and other services exports support the stronger near-term projection, even as energy costs weigh on the outlook.[1], [2]
The bank estimates that higher oil and gas costs could subtract 0.4–0.5 points from growth and add 0.8–0.9 points to inflation through the end of next year. It forecasts inflation averaging 3.6 per cent this year and 3.2 per cent next year. The duration of the energy-price increase is central to that assessment.[1]
Households can initially absorb a temporary loss of purchasing power by saving less or borrowing, according to the bank. The economists expect that room to narrow as higher energy prices persist, putting consumption and investment under greater pressure.[1], [2]
BBVA Research expects private consumption to grow 3.1 per cent this year and 2.2 per cent next year. Employment growth, lower household saving and rising property wealth support spending, while higher prices and interest rates curb the pace. Its employment-growth forecasts are 2.4 per cent and 2.0 per cent respectively.[1]
