MADRID, April 8 (Xinhua) -- Spain's second-largest bank BBVA on Thursday lowered its predictions for the growth of the country's GDP to 4.1 percent in 2022 and 3.3 percent in 2023, from its previous expectations of 5.5 and 4.9 percent, respectively.
According to the "Spain Economic Outlook" report presented by BBVA Research, the fall is mainly due to the impact of the Russia-Ukraine conflict, the sanctions imposed on the Russian economy and the increase in prices, especially energy-related, over the last few months.
This revised estimate is similar to that of the Savings Banks Foundation (Funcas), which lowered its growth estimate to 4.2 percent for 2022; and that of the Bank of Spain, which expects Spain's GDP to rise by 4.5 percent for the year.
The report says the conflict between Ukraine and Russia will affect Spain's economy through different channels, as the conflict will lead to a fall in the demand for goods and services by Russia and Ukraine, while the sanctions imposed on Russia by the European Union (EU) will significantly reduce trade relations with this country.
Jorge Sicilia, the director of BBVA Research and chief economist of the BBVA Group, explained that one of the main consequences of the Russia-Ukraine conflict will be the rise in the price of raw materials, as well as a fall in investor and consumer confidence.
"The duration of the conflict will determine the individual effect of each of these elements," Sicilia assured.
He also pointed out the possible risks of rising electricity prices, inflation and possible wage increases.
On a more positive note, Rafael Domenech, an economist of the BBVA Group, said there are still "many elements" that will support economic growth, such as a rise in consumption, a dynamic housing market, the recovery of tourism and the deployment of Next Generation EU funds. ■
