MADRID: The Spanish economy should grow at a higher pace this year than previously expected after a solid first half, with strong domestic demand likely to offset weaker exports, the Bank of Spain said on Friday.
In its economic outlook for 2019-2021, the central bank forecast growth this year of 2.4%, above its previous 2.2% view released in March but still marking a slowdown from 2018's 2.6% expansion.
It left its growth outlook for 2020 and 2021 unchanged at 1.9% and 1.7% respectively.
"The year has started with higher growth than expected ... and signs in the second quarter point to the economy keeping up solid growth too," Oscar Arce, the Bank of Spain's director general for economics, statistics and research, told a news briefing.
The central bank forecast that gross domestic product would expand 0.6% in the second quarter from the previous three-month period when growth reached 0.7%.
"It is expected that the rate of progress of the economy will continue to comfortably exceed its potential rate (1.5%), which will allow it to continue to grow, allowing the still high volume of unemployment to be reabsorbed," it said.
Spain's growth outlook contrasted with that of Germany, the euro zone's largest economy. On Friday, Germany's central bank slashed its 2019 growth projection to 0.6% saying industrial groups would suffer from weak demand through the rest of the year.
Spain's economy has consistently outperformed much of the European Union since it emerged from a five-year slump in 2013, though growth is expected to ease slightly this year as a weakening global economy weighs on exports.
The Bank of Spain said it expected growth to continue in the medium term thanks to better competitiveness and good financing conditions while monetary policy remains accommodative.
The risks to its forecasts include Britain potentially leaving the EU with no deal on their future relations, increasing global trade tensions and uncertainties over Italian fiscal policy.
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