Spain cuts 2022 growth forecast over war in Ukraine

Spain on Friday slashed its economic growth forecast for 2022, mainly due to the fallout of Russia’s invasion of Ukraine which has fuelled inflation and hurt consumer demand.

The gross domestic product of the eurozone’s fourth-largest economy is now expected to expand by 4.3 percent rather than the 7.0 percent previously forecast, the economy ministry said.

“The aggression against Ukraine is having important economic and social effects, which are affecting all European countries,” Economy Minister Nadia Calvino told a news conference.

Madrid had previously hoped for a firm recovery for 2022, reasoning that the impact of the coronavirus pandemic would begin to ease.

But Russia’s invasion of Ukraine has further exacerbated supply chain woes and pushed up prices of daily necessities, especially energy.

Spain’s economy expanded 0.3 percent in the first quarter of 2022, slowing from 2.2 percent in the previous three months, national statistics institute INE said earlier on Friday.

The country’s tourism-dependent economy expanded by 5.1 percent last year after plunging by 10.8 percent in 2020 due to the pandemic, one of the worst results among industrialised countries.