The Bank Of Spain Will Revise Spanish Economic Growth “Significantly Downwards”

The Bank of SpainPablo Hernández de Cos, Bank of Spain's governor

The governor of the Bank of Spain (BdE), Pablo Hernández de Cos, warned yesterday that the institution’s analysts will revise “significantly downwards” their forecasts for Spain’s economic growth this year. He did so during his speech before the Congressional Budget Committee, to offer his opinion on the draft General State Budget for 2022.

Furthermore, Hernández de Cos said he believes that some revenues in the General Budget have been calculated too optimistically. In this respect, the governor assured that the BdE will not publish new macroeconomic projections until December.

It is worth remembering that the BdE’s current estimates point to a growth in Spain’s Gross Domestic Product (GDP) of 6.3% in 2021, which would slow slightly to 5.9% in 2022. However, last month the National Statistics Institute (INE) significantly revised downwards its previous estimates of quarter-on-quarter GDP growth in Q2’2021 from an initial estimate of 2.8% to 1.1%. In light of this, the Bank of Spain Governor pointed out that such a large downgrade mechanically entails a substantial reduction in the average GDP growth rate for 2021 and, to a lesser extent, also for 2022.

Hernández de Cos also pointed to the risks facing the Spanish economy, with particular emphasis on the development of mismatches between the supply and demand of goods and the degree of persistence of inflationary pressures.

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