Spain's economic growth forecast raised for 2024 and 2025

Investing.com -- The Bank of Spain has increased its economic growth projections for Spain for the years 2024 and 2025, attributing the improved forecast to a more positive outlook for domestic demand.

According to the central bank's Tuesday presentation, the gross domestic product (GDP) is expected to grow by 3.1% in 2024 and 2.5% in 2025. This marks an upward revision from the bank's September predictions, which anticipated a 2.8% expansion in 2024 and a 2.2% growth in 2025. The bank's growth forecast for 2026 remains unchanged at 1.9%, with a 1.7% growth predicted for 2027.

The Bank of Spain noted that economic activity in the latter half of 2024 is expected to be more vigorous than previously forecasted. This is due to reconstruction efforts and government support measures implemented in response to the severe flooding that took place in October. These factors are predicted to contribute to a more robust increase in domestic demand during the first half of 2025 than was initially projected in September.

Spain has been experiencing the most robust growth among the largest economies in the euro-region. Indicative of its economic health, the country's unemployment rate is currently around the lowest it has been in over 15 years.

However, the eastern region of Valencia in Spain suffered significant damage due to floods, leading to the destruction of numerous buildings and substantial infrastructure. This event marked the country's deadliest natural disaster in several decades. In response, the government has announced several aid packages to assist the affected regions.

In addition, the central bank predicts a slowdown in inflation, forecasting a decrease to 2.1% in 2025 from 2.9% in 2024.

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Source: Investing.com