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Spain lowers growth forecast for 2019 and 2020

[MADRID] The Spanish government on Tuesday slightly lowered its growth projections for 2019 and 2020 due to the slowdown in the global economy.

In draft budget plans submitted to the European Commission, the Socialist government, which is gearing up for fresh general elections on November 10, said it expected the economy to grow by 2.1 per cent this year, down from an earlier forecast of 2.2 per cent.

For next year, it lowered the forecast to 1.8 per cent from 1.9 per cent.

Last year, the eurozone's fourth-largest economy grew by 2.4 per cent.

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"Despite the slowdown caused by external factors and the international climate of uncertainty, Spain continues to grow above the average rate in the eurozone," a government statement said.

Last month, the ECB cut its growth forecast for 2019 to 1.1 per cent, and to 1.2 per cent for 2020.

The Spanish economy, which has outpaced the average growth of eurozone countries in recent years thanks to strong internal demand, has lately shown signs of cooling due to the slowdown in the global economy and political instability at home.

The Bank of Spain also cut its growth forecast last month, saying it expects expansion of 2.0 per cent this year, with a further deceleration to 1.7 per cent in 2020. That compares with June projections for growth of 2.4 per cent this year and 1.9 per cent in 2020.

The bank underlined the impact of the ongoing political instability which it said was impeding the adoption of necessary measures to address the vulnerabilities in the Spanish economy and improve its capacity for growth.

The political deadlock will see Spain next month holding its fourth elections in as many years, with the situation further exacerbated by the crisis in the northeastern Catalonia region.

AFP