The Spanish economy slowed in the first quarter and the outlook for the year was lowered, the central bank said yesterday.
The pace of growth slowed to 0.7% from 0.8% in the fourth quarter last year, the Bank of Spain said as it cut its annual growth forecast for 2016 to 2.7% from a previous estimate of 2.8%.
That compares to growth of 3.2% last year, which saw Spain’s economy accelerate at the fastest pace since 2007.
The revision comes as lawmakers in Spain struggle to form a working coalition government following an inconclusive election in December, resulting in a political deadlock that could result in fresh elections in June.
The Bank of Spain sees consumer prices falling an average of 0.1% in 2016. The projections come a day after Spain said it missed its deficit reduction target for the eighth consecutive year in 2015.
The shortfall came in at 5.2%, compared to a European Commission target of 4.2%, making it the second-highest differential in the EU after Greece, even as the recovery gained momentum.
The Bank of Spain said it sees the deficit at 4.4% in 2016 and 3.4% in 2017.
Meanwhile, unemployment, stuck above 20% since late 2010 coinciding with the height of the economic crisis, is expected to continue falling. Unemployment is seen slightly above 18% by the end of 2017.
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