Investing.com -- Spain’s economy is anticipated to maintain a steady growth rate of between 0.5% and 0.6% in the second quarter, according to the central bank. This news comes following the previous quarter’s 0.6% expansion. The central bank made this announcement on Tuesday, a day after revising its long-term forecast.
Bank of Spain Governor Jose Luis Escriva on Monday reduced the year’s growth estimate to 2.4%, from the previously expected 2.7%. Despite the reduction, the growth rate remains significantly higher than the average for the euro zone. The revision was made due to the potential impact of global trade tensions.
The central bank also shared its expectations for the upcoming quarters in its full report on Tuesday. It anticipates a continued gradual slowdown in the Spanish economy. This slowdown is expected to occur despite a potential increase in activity from higher defense and infrastructure spending in the EU.
The bank’s outlook was calculated based on a central scenario. This scenario includes U.S. tariffs of 10% on European goods, without any retaliation, explained Angel Gavilan, the Bank of Spain’s chief economist.
The bank also considered a more pessimistic scenario. This scenario involves 20% tariffs from the U.S., with retaliation from the European Union. Under these conditions, Spain’s economy would only grow 2% this year, slowing down to approximately half that rate by 2026.
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