The Bank of Spain has declined its growth forecasts for the Spanish economy in 2018 and 2019, from 2.5 to 2.4% and from 2.2 to 2.1% respectively following the unresolved political turmoil in Catalonia.
The Spanish government has also predicted the Spanish GDP to fall by 0.1% in 2018, from 2.5 to 2.4%.
Although the institution has remained with the same forecasts on Spanish economy for this year – with 3.1% growth expected -, it has predicted the Spanish economy to grow just by 2.1% in 2020.
Despite Bank of Spain said in November it expected the Catalan political turmoil to impact on Spanish GDP just in the fourth quarter of 2017, it has now warned this impact on the economy may be extended to the first quarter of 2018 given the growing level of uncertainty. However, the institution underlined this scenario could vary depending on the outcome of the upcoming regional elections to be held on 21 December in Catalonia.
The Bank of Spain published on 28 September a report on the macroeconomic projections for the period 2017-2019, in which it referred for first time to the potential impact of the Catalan political crisis on the economy.
Regarding the unemployment rates in Spain, the institution seems optimistic in its predictions for 2020, foreseeing them to fall from the current 16% to 11%.