2019.09.2408:24:00UTC+00Bank Of Spain Cuts Growth Outlook

The Bank of Spain on Tuesday downgraded its growth projections citing weaker domestic demand, deterioration in external environment and uncertainties in global economy.

GDP is forecast to grow 2 percent in 2019 instead of 2.4 percent estimated previously. Likewise, the outlook for 2020 was trimmed to 1.7 percent from 1.9 percent and that for 2021 to 1.6 percent from 1.7 percent.

On the labor market, the central bank expects the growth rate of employment to moderate gradually. The bank said job creation will reduce the rate of unemployment to 12.8 percent by the end of 2021.

The bank noted that the gradual widening of the output gap and the higher wage increases projected, along with the expansionary monetary policy stance, will translate into higher upward pressures on prices.

Inflation is forecast to rise to 1.1 percent next year from an estimated 0.8 percent in 2019. Inflation is seen at 1.5 percent in 2021.