The Bank of Spain has reduced this Friday its growth forecast for next year to 2.4% compared to 2.5% previously anticipated. And for 2019 reduces from 2.2% to 2.1%. This cut blamed it completely to tensions registered in Catalonia. The good news, however, is that it calculates a rar mild effect. For time being, for next year alone it falls in two tenths in Catalonia, and one of m is compensated by adding an extra 0.1 for best behavior of external sector, that will take advantage of economic improvement in whole world and, especially, in eurozone. With respect to 2019, it only decreases its estimation by a tenth by Catalan uncertainty.
With this review, Bank of Spain is placed in lowest range of possible impacts that had been estimated by political situation in Catalonia. The agency had encrypted cradle of possible damage between 3 and 2.5 tenths of GDP over next two years. "In internal sphere, uncertainty persists over Catalonia. The final impact of this element of risk for whole of Spanish economy will depend on magnitude and persistence of tensions. A relief, like one that has begun to be perceived in recent weeks, of degree of tension could lead to a scenario of higher growth of product. On contrary, a hypotical regrowth of tensions in coming months could lead to a more pronounced impact on spending decisions of private agents, "warns institution located in Cibeles in report published this Friday.
"The projections envisage a continuation of current expansive phase, favoured by progress achieved in restoration of macroeconomic balances of economy, which have endowed same with a greater capacity of resistance to Adverse disturbances. However, re is a moderation in growth of product, as some of expansive impulses that have operated in past fade away, warns supervisor.
"The extent of political uncertainty around Catalonia will constitute an additional determinant of evolution of Spanish economy along time horizon considered. In central scenario, it has been assumed that level of uncertainty recorded in last few months will be forwarded during first part of 2018, "he says.
For next few years, employment forecasts are positive. "The high growth rates observed in recent years are expected to be moderated as projection period progresses, in line with projected slowdown in activity. The sustained increase in occupation will allow for additional declines in unemployment rate, until at end of 2020, around 11%, "he says.
In area of inflation, in short term, Bank of Spain foresees a slowdown in index of consumer prices (CPI), as a result of disappearance of effects that caused to compare with energy prices observed a year earlier. "From spring of 2018, dynamics of consumer prices would be determined mainly by underlying component, for which a gradual recovery is projected in a context of prolongation of upward phase of cycle. In terms of annual average, after increasing by 2% in 2017, IPC would grow by 1.5% and 1.4% in 2018 and 2019, respectively, before accelerating to 1.7% in 2020. In September projections, general inflation is revised upward in 2017 and 2018, as a result of higher expected levels of oil prices, and downwards in 2019, due to a somewhat less dynamic evolution of underlying component. "