BBVA Research has lowered its growth forecast for the Spanish economy both in 2017 and in 2018.
The latest report from the Spanish entity said it expects Spain GDP to expand by 3.1% this year – down from a previous estimate of 3.3% – and by 2.5% in 2018, also down from the 2.8% previously estimated.
BBVA attributed the growth downgrade – particularly that foreseen for 2018 – to the ongoing political crisis in Catalonia (to a great extent).
BBVA Group’s chief economist and BBVA Research’s director Jorge Sicilia said:” The increased volatility in some financial variables is related to the political environment in Catalonia.
“We fear a slowdown in consumer-led growth if the political turmoil continues growing.”
However BBVA claimed caution when analising the potential impacts of the political crisis. “Estimating the impact on Spanish GDP in relation with the current political environment in Catalonia is particularly complicated”.
According the estimates, the uncertainty arising from the independence process could reduce economic growth between 0.2 and 1.1% compared to the evolution that could have taken place in a hypothetical environment lacking in tension. This could entail an economic loss ranging from €2.3bn to €13bn depending on whether the crisis prolonges.
“With the information available to the date, it is expected a limited impact in the most likely scenario, with GDP growing by 2.5% on average in 2018,” BBVA concluded.