Bank of Spain improves its economic forecast for remainder of 2023

THE BANK OF SPAIN has raised its economic growth forecast for 2023 to 2.3% from 1.6% in March as activity picked up more than expected at the start of the year, with energy costs easing and employment rising.

The country’s GDP has also been boosted in recent months with record numbers of foreign visitors pumping money into the economy.

The Bank says that GDP will rise by 2.2% and 2.1% respectively in 2024 and 2025.

“The Spanish economy has shown remarkable resilience in the first half of the year,” highlights the Bank of Spain’s quarterly report published on Monday.

The entity believes that inflation will close the year at an average of 3.2% compared to 3.7% in its last quarterly report in March.

The rate will almost certainly rise initially in 2024 as the government removes anti-inflation measures like tax on essential foodstuffs.

The Bank then believes that inflation will fall below the European Central Bank’s official target of 2% in 2025.

Public debt, which reached record levels with the pandemic, will continue its declining path at a faster pace than previously estimated.

In 2023, it will reach 109.7% of GDP, an improvement of more than one point from March.

Next year it will be 107.4% and the following year it will be 108%.

“In a context in which the degree of uncertainty remains high, the risks surrounding the growth projections are mainly oriented to the downside, while, in the case of inflation, they are considered balanced,” the quarterly report concluded.

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