Bank of Spain lifts 2025 economic growth forecast to 2.6%

MADRID, Sept 16 (Reuters) - Spain's central bank has raised its economic growth forecast for this year to 2.6% from 2.4%, more than twice the euro zone average, citing a better than expected second-quarter performance, supported by consumer spending.

The bank kept its growth estimates for next year and 2027 at 1.8% and 1.7% respectively, saying it expected economic activity to be dampened by external shocks such as global tariffs.

Though Washington and Brussels agreed a U.S. import tariff of 15% for most European Union goods, averting a trade war, some uncertainties remain, the bank said.

"Although the Spanish economy has so far managed to navigate the complex international environment, a possible deterioration in the external context or the possibility that this uncertainty could have a more adverse impact than that observed to date cannot be ruled out," it said in its quarterly report.

The Spanish government also raised its own economic growth forecast, to 2.7% from 2.6%, on Tuesday.

Spain's economy has steadily expanded in the aftermath of the pandemic, outpacing the sluggish growth of euro zone peers. The European Central Bank expects the euro zone economy to grow 1.2% this year.

The Bank of Spain also said that the Spanish economy was set to grow between 0.6% and 0.7% in the third quarter of 2025 from the previous three months, when it expanded 0.7%, as lower interest rates bolster domestic demand.

The bank said it expects higher energy prices to push EU-harmonised inflation to 2.5% this year, up from its forecast of 2.4% three months ago, though below the 2.9% inflation rate of 2024.

It maintained its forecasts for inflation of 1.7% and 2.4% in 2026 and 2027, respectively.