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Bank of Spain sees inflation hitting 7.5% in 2022, lower growth in 2022, 2023

© Reuters. FILE PHOTO: People sit on a terrace at Las Canteras beach, amid the spread of the coronavirus disease (COVID-19), in Gran Canaria, Spain, March 14, 2021. Picture taken March 14, 2021. REUTERS/Borja Suarez

MADRID (Reuters) – Spain’s central bank on Tuesday lowered its economic growth forecast for this year and next due to the impact from Russia’s invasion of Ukraine that has stoked inflation, and said the pace of recovery had already slowed down in the first quarter.

The Bank of Spain now expects gross domestic product to expand 4.5% in 2022, below its December estimate of 5.4%. Growth is then expected to slow down to 2.9% in 2023, also less than the previously predicted 3.9%.

Last year, the Spanish economy rebounded 5.1% after a record 10.8% slump in 2020 induced by the coronavirus pandemic.

The central bank put first-quarter GDP growth at 0.9% from the previous three-month period, when the expansion was 2.2% and expects EU-harmonized consumer inflation to have clocked 7.9% in the first quarter.

For all of 2022, inflation should reach 7.5%, double its previous forecast of 3.7%, before gradually dropping to 1.6% by 2024.

“The conflict in Ukraine and the economic sanctions imposed on Russia are expected to have a severe impact on growth prospects for the coming quarters,” it said.

Bank of Spain lowers growth forecast, sees 2022 inflation soaring to 7.5%

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