MADRID: Spain’s economy is likely to grow at a solid rate of between 0.5% and 0.6% in the second quarter from the previous three months when it expanded 0.6%, the central bank said on Tuesday, a day after it trimmed its longer-term outlook.
Bank of Spain Governor Jose Luis Escriva on Monday lowered this year’s growth estimate to 2.4%, still well above the euro zone’s average, from 2.7% expected previously, citing the impact of the global trade tensions.
“Looking ahead to the coming quarters … the gradual slowdown in the Spanish economy is expected to continue despite the boost to activity that could come from higher defence and infrastructure spending in the EU,” the central bank said in its full report on Tuesday.
The outlook was calculated under a central scenario with U.S. tariffs of 10% on European goods and no retaliation, said the Bank of Spain’s chief economist, Angel Gavilan.
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Under a more pessimistic scenario of 20% tariffs retaliated by the European Union, Spain’s economy would grow just 2% this year and slow down to about half that pace in 2026.
The EU already faces 25% U.S. import tariffs on its steel, aluminium and cars, and the so-called “reciprocal” tariffs of 10% for almost all other goods, a levy that would rise to 20% after a 90-day pause is set to expire in July.
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