2017.12.1504:56:00UTC+00Bank Of Spain Trims Growth Projections

Spain's central bank downgraded its growth projections citing the uncertainty arising from the situation in Catalonia.

In a report released Friday, the Bank of Spain said it anticipated that after growth of 3.1 percent this year, gross domestic product will increase by 2.4 percent in 2018 and 2.1 percent in both 2019 and 2020.

While the outlook for 2017 was retained, the projection for 2018 was lowered from 2.5 percent and that for 2019 from 2.2 percent.

Slower output growth is expected as the effect of some of the expansionary drivers operating in the past wears off.

The bank said the extent of the political uncertainty surrounding Catalonia will be an additional factor in determining the course of the Spanish economy over the forecast period.

The central bank noted that the outlook will continue to be underpinned by domestic demand but it will foreseeably slow over the coming years. Meanwhile, net external demand will continue to make a positive contribution, the bank added.

Further, the bank expects the jobless rate to fall to around 11 percent at the end of 2020.

Turning to inflation, a slowdown is expected in the short term as a result of the disappearance of base effects and the rise in energy prices seen a year earlier.

Inflation is projected to grow 1.5 percent and 1.4 percent in 2018 and 2019, respectively, before accelerating to 1.7 percent in 2020.