MADRID (Reuters) – The Spanish economy could be hit by supply bottlenecks, rising inflation and a surge of COVID-19 in Europe, prompting a slight downward revision of growth forecasts in the fourth quarter and early 2022, Bank of Spain Governor Pablo Hernandez De Cos said on Tuesday.
He said these recent developments were likely to prompt a “significant downward” revision of the bank’s estimates for Spain’s economic growth in 2021, due to be updated in December, and also affect the 2022 forecast.
Taking into account these projections, pre-pandemic levels of economic activity would not be reached until around early 2023.
Tourism, which used to account for more than 12% of Spain’s GDP before the coronavirus outbreak, would not fully reach pre-pandemic levels until the summer of 2023, De Cos said.
Spain’s central bank chief also said the economic outlook for the coming months would depend on the strength of household consumption and the implementation of European Recovery funds.
“Although the expectation of recovery is real, its speed and depth are subject to a high degree of uncertainty,” he told members of the upper house of parliament during a budget commission hearing.
The Spanish economy is bouncing back after a record plunge of 10.8% last year, although at a slower pace than expected.
The European Commission expects Spain to grow 5.5% in 2022, versus 6.3% previously, but the government has so far stuck to its upbeat forecast of 7% growth next year.
Spanish inflation hit its highest in nearly three decades in November as a jump in food and fuel costs pushed consumer prices up to 5.6% year-on-year.
The rate accelerated from October’s 5.4% to reach its highest level since September 1992’s 5.8%. Inflation has been rising across the euro zone in recent months, with Spain particularly hard hit.
(Reporting by Jesús Aguado and Emma Pinedo; editing by Mark Heinrich and Bernadette Baum)