Askume, Sept 17 – The Bank of Spain on Tuesday raised its economic growth forecast for this year to 2.8% from 2.3% and predicted the economy would recover from 2023, mainly driven by a tourism boom and population growth.
The Bank of Spain raised its economic outlook for the second consecutive year, having previously predicted economic growth of 1.9%. The economy grew by 2.5% last year.
In comparison, for the broader euro zone, the European Central Bank on Thursday lowered its 2024 economic growth forecast for the region to 0.8% from 0.9%.
Spain’s economic growth may have slowed to 0.6% in the third quarter, after rising a better-than-expected 0.8% in the first three months, the report said on Tuesday. Tourism contributed 0.3 percentage points to the increase.
The company said the strong performance in the second quarter had a positive impact on its full-year forecast.
Foreign tourist spending rose 18.6% to 71 billion euros ($79 billion) in the first seven months of 2024 , boosting net external demand despite anti-tourism protests and early concerns about extreme summer temperatures.
Population growth driven by migration inflows and the resilience of Spain’s manufacturing sector relative to other euro zone countries also contributed to high growth, the central bank said .
Spain’s services exports also outperformed its competitors, with telecommunications, consulting, construction and banking making the biggest contributions.
Although private consumption is still lagging, the central bank expects low interest rates and sluggish inflation to lead to an improvement in the coming quarters.
Monetary policy is estimated to reduce Spanish economic growth by 1.3 percentage points in 2023.
Households are no longer spending as much on cars and durables, and consumption is slowing amid rising incomes, the report said.
The central bank raised its forecasts for 2025 and 2026 to 2.2% and 1.9% from 1.9% and 1.7%, respectively.
The bank expects inflation to reach 2.9% this year, down from a forecast of 3% three months ago, and fall gradually to 2.1% and 1.8% over the next two years. Prices for services rose more than the bank had previously expected.
