Bank of Spain to Revise Down 2021 GDP Forecasts, Governor Says

Bank of Spain Revises Down 2021 GDP Forecasts Amid New Data

By Jesús Aguado and Emma Pinedo

MADRID (Reuters) -The Bank of Spain will revise down its latest economic forecasts for 2021 after the Spanish statistics institute last week sharply downgraded its growth reading for the second quarter, central bank governor Pablo Hernandez de Cos said on Tuesday.

However, De Cos reiterated that he anticipates a gradual normalisation of activity in the coming months, assuming the economy improves as the pandemic eases.

Spain’s second-quarter gross domestic growth was revised to 1.1%, down from an original 2.8%, official data showed last week, jeopardising upbeat full-year forecasts of a return to pre-pandemic output levels.

Just two days earlier, the Bank of Spain had raised its estimate for full-year growth forecast for 2021 to 6.3% from 6.2%.

“These forecasts will have to be updated once the implications of the profound revision made by the (statistics institute) INE to the growth observed in the second quarter of the year,” De Cos said.

The INE’s downward adjustments were prompted by final data on sales, from both large and small companies, in the service and manufacturing industries, as well as private consumption.

The segments most exposed to consumption, such as retail, restaurants and transport, had shrunk 0.4%, while it had previously estimated 5.5% growth.

Until this revision, the Spanish economy had been seen as experiencing one of the fastest rebounds among developed countries, after a 10.8% slump in 2020.

(Reporting by Jesús Aguado and Emma Pinedo; editing by Inti Landauro and Raissa Kasolowsky)