The Spanish government has lowered its GDP growth forecast due to the impact of the war in Ukraine.
According to latest figures from the National Statistics Institute (INE), the Spanish economy expanded by just 0.3% in the first quarter of 2022 – 1.9% less than the previous quarter when it had increased 2.2%.
Officials had initially expected to see a growth of 7% as the country consolidates its recovery after the pandemic, but this estimate has now been lowered to 4.3% due to the “intense uncertainty” of the international situation.
The Spanish minister for economic affairs, Nadia Calviño, explained in a press conference that the forecasts were made with “extreme caution” due to international instability as well as the escalation of energy prices, and ongoing “problems in global supply chains.”
Spain´s assessment of her economic prospects this year are also shared by other international institutions such as the European Union and International Monetary Fund (IMF), who predict growth in the EU´s fourth largest economy of 4.5% and 4.8% respectively – slightly higher than the government but significantly below the pre-invasion estimates.
The lower forecasts mean that Spain is unlikely to recover pre-pandemic levels until 2023 when forecasts predict the GDP will grow by 2.9%.
Inflation in Spain dropped slightly in April from an all-time high in March, yet it remains at a 30 year high of 8.4% according to figures released by the National Statistics Institute.
To help ease the cost of fuel prices the government 20 cents per litre discount om petrol to run until the end of June.
It has also agreed on a cap of electricity prices for a year with the European Union which is expected to be reflected in consumer’s bills in May.
The one piece of good news is that Spain´s key tourist sector expanded by 5.1% last year after plunging by 10.8% in 2020 due to the pandemic and which saw foreign visitors numbers fall by 80% to 19 million, the lowest figure in over 50 years.