Bankinter: Bank of Spain downgrades GDP projections to +2.4% p.a. for 2025 (-0.3pp) and +1.8% p.a. 2026 (-0.1pp). In his appearance before the Congressional Committee on Economy, Trade and Digital Transformation, the Governor of the Bank of Spain anticipated the revision of the quarterly macro picture whose report will be published today. The adverse scenario with a prolonged tariff escalation would have a “significant negative impact” on the Spanish economy, the Bank of Spain points to +2.0% for 2025 (-0.4 pp with respect to the central scenario) and +1.1% (-0.7pp with respect to the central scenario) for 2026.
Regarding inflation, it projects an average annual change of +2.4% in 2025 and 1.7% in 2026 (2.1% and 1.2% in the adverse scenario), although it noted that it could rise if supply chain disruptions occur. It puts the Underlying Rate at +2.6%, +0.4pp above the previous forecast, for 2025 and +2.1% YoY (+0.1pp from the previous forecast). It maintains the Unemployment Rate at 10.5% for 2025 and lowers it by two tenths of a point in 2026 to 10.2%. No changes in its Public Deficit projections (-2.8% 2025 and -2.6% 2026).
Analysis team’s view: The downward revision highlights the moderation in growth already shown in 1Q25showed in 1Q25 (where quarter-on-quarter growth was +0.6% quarter-on-quarter from increases between +1.0% quarter-on-quarter and +0.7% quarter-on-quarter in 2024), in addition to the high uncertainties regarding the tariff situation. Just yesterday in the Business Activity Survey, companies showed a “slight decline” in 2Q25 seasonally adjusted turnover. Today we will know the details of the report, but the statements add the reference to a new adverse scenario in view of the tariff situation (pointing to +2.0% year-on-year in 2025 and increasing impact in 2026 to +1.1% year-on-year). Our projections in the last quarterly report (Mar-25), already pointed to a moderation of the growth rate for this year in view of the decline in the contribution of the external sector and the beginning of the escalation of trade uncertainty (to +2.5% year-on-year and +1.9% in 2026, with a negative scenario pointing to +1.9% year-on-year and +1.3% year-on-year).
