Central bank says:Spanish economy bucks euro slowdown

The Bank of Spain said on Wednesday that the Spanish economy expanded at the beginning of 2019 at a rate similar to its growth at the end of 2018, as the stronger domestic demand expected to compensate for a slowdown in exports.

The growth of the Spanish economy even reached that point compared to the largest eurozone economy, Germany. The latter’s economy was approached by the recession in the first quarter. The slower growth than expected was set by the European Central Bank in defense.

Inflation and growth in the region will continue to slow this year, a prospect that has prompted investors to push expectations for when interest rates will increase by the end of 2020 by mid-2020, ECB Vice-President Luis de Guindos said .

Spain’s gross domestic product, meanwhile, rose 0.6 percent in January-March from a quarter earlier, according to central bank forecasts, after 0.7 percent at the end of 2018 and at a similar rate in the three quarters last year.

The National Institute of Statistics will publish gross domestic product data on April 30th.

In its annual report, the bank said: “Spain has not been immune to external worries, which appeared at the end of last year as a noticeable loss of export power.”

He said, “However, internal dynamism has offset the deterioration of external factors to the extent that it has not produced a slowdown in activity as seen across the euro area.”


He said: “Private consumption in Spain was particularly strong on the back of strong job creation and increased purchasing power thanks to low inflation and declining savings.”

The Bank had a continuation of the extended lending stage in the mid-term, while foreign markets improved, noting a boost from the growing competition of Spanish export businesses and good financing conditions between an accommodating monetary policy.

For 2019 the annual growth of 2.2 percent, the 2020 growth of 1.9 percent, and the 2021 increase of 1.7 percent according to the bank of Spain, reiterated its projections, published in December.

The uncertainty surrounding Britain’s exit from the EU, the rise of global protectionism and a possible Chinese economic downturn are included in the risks of projections.

The bank also stated that more efforts are needed to reduce the public deficit and debt to protect the economy from potential future shocks.

The bank said its forecast for the public deficit this year deteriorated to 2.5 per cent of GDP from a previous December forecast of 2.4 per cent of GDP.

The Socialist government was forced to roll the 2018 budget this year after the 2019 budget proposal was overthrown in parliament./Investing.com


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