Spain’s central bank, Banco de España, raised its growth forecasts to 2.6 per cent this year and 2.2 per cent in 2027. It also expects higher inflation, with energy prices feeding into its updated outlook. Consumption, employment and population growth support activity. The central bank’s October projections use data through October 2 and describe its baseline expectations for growth, prices and public finances.
Spain’s central bank, Banco de España, raised its growth and inflation forecasts in its October 9 economic outlook.[1], [2]
It projects real gross domestic product growth of 2.6 per cent this year and 2.2 per cent in 2027, compared with June forecasts of 2.3 per cent and 1.7 per cent. Its baseline uses information through October 2.[1]
Average inflation measured by the harmonised consumer price index is projected at 3.9 per cent this year and 3.7 per cent in 2027. Those are upward revisions of 0.3 points and 1.1 points. The bank describes price pressure in goods and services alongside higher energy costs. Excluding food and energy, inflation is forecast at 3.4 per cent and 3.5 per cent respectively.[1]
Between the assumptions cut-off dates for the June and October exercises, oil prices rose 4 per cent and natural gas prices 52 per cent. Spain’s 10-year government bond yield increased 55 basis points over the same period. These are changes in the conditions used for the central bank’s projections.[1]
The bank links growth resilience to private consumption, employment and population growth. It expects consumption to expand 3.0 per cent this year and 1.9 per cent in 2027. Domestic demand would contribute 3.0 and 2.0 points to growth, while net exports would subtract 0.4 points this year and add 0.2 next year. The bank also projects unemployment averaging 10.0 per cent and 9.7 per cent, and the public deficit narrowing from 2.6 per cent to 2.2 per cent of GDP.[1]
