MADRID (Reuters) – A booming tourism industry will help Spain’s overall economic growth rise to 2.3 percent in 2024, well ahead of the European Union, the Bank of Spain said on Tuesday.
In updating its quarterly outlook, the central bank raised its growth forecast from 1.9% three months ago. Spain’s economy expanded 2.5% last year.
“The positive surprise in tourism activity was mainly due to a pick-up in tourism service exports,” the report said, adding that more foreign tourists were visiting more parts of the country and spending more money.
The bank said better-than-expected first-quarter growth of 0.7 percent also had a positive impact on its full-year outlook.
The central bank projected quarterly growth of 0.5% in the second quarter and maintained its growth forecasts for 2025 and 2026 at 1.9% and 1.7%, respectively.
Spain’s growth rate outpaces other major European Union countries and is clearly above the euro area’s average forecast of 0.9% for 2024.
Spain’s growth forecast contrasted with the Bundesbank’s decision to cut its forecast for German economic growth in 2024 to 0.3 percent from 0.4 percent previously.
But the Bank of Spain warned that uncertainty about the sustainability of the services sector’s vitality and reinvigorated EU fiscal rules limiting budget deficits could hurt growth.
“Complying with these rules will require the development and implementation of a medium-term fiscal consolidation plan that will allow for the correction of a larger fiscal deficit than assumed in these projections,” the report said.
The Bank of Spain raised its forecast for EU harmonised consumer price inflation this year to 3% from 2.7% previously, expecting higher energy prices and faster core inflation.
The bank now sees inflation easing gradually to 2% and 1.8% over the next two years, but at a slower pace than previously expected.
(Reporting by Emma Pinedo and Inti Landauro; Editing by Andrei Kalip, Charlie Devereux and Chiz Nomiyama)
