The Banco de España has lowered its growth forecast for Spain in 2023 by three-tenths of a percentage point, bringing it to 2.4%.

This adjustment is attributed to the ongoing tensions in the international context, particularly due to tariffs imposed or announced by the Trump administration.

The announcement was made by Governor José Luis Escrivá during a session in Congress, ahead of the planned presentation by departing Director General of Economics Ángel Gavilán. Escrivá highlighted that the Spanish economy is experiencing a deceleration, moving from growth rates above 3% to approximately 2.5% in the first half of 2025, aligning now with projections from the OECD and moving away from the government’s previous estimate of 2.6%.

The primary reason cited for this deceleration is the reduced contribution from the external sector, amid a climate of unprecedented uncertainty influenced by trade tariffs.

This revision partially retracts the improvements made in March when the Bank increased its growth forecast from 2.5% to 2.7% for the year.

In addition to the growth forecast, Escrivá addressed the escalating housing crisis, describing it as a significant bottleneck affecting the labor market and overall economic development.

He noted a continuing gap between household formation and housing construction, despite some reduction since 2022. The total housing shortage is projected to reach around 700,000 units by the end of this year, with an estimated deficit of 150,000 units for this year alone.

Escrivá overviewed various proposals to address the housing issue, including industrial construction, streamlined administrative processes, stable regulatory frameworks, and public rental assistance measures.

The economic outlook was further discussed with emphasis on the impacts of the trade conflict and rising tariffs, which have yet to fully materialize.

Escrivá warned of significant indirect effects, particularly in sectors like chemicals, where indirect impacts can quadruple those of direct ones.

Moreover, uncertainty among businesses appears to be rising due to tariffs, with approximately 30% of companies reporting adverse effects from these policies and 80% acknowledging the relevance of the current uncertain context.

A prolonged escalation of tariffs could have a notably negative effect on the Spanish economy, leading the Banco de España to adjust its adverse scenario growth forecast to just 2% for this year.

Looking ahead, the Banco de España has projected a 1.8% increase in GDP for 2026, slightly lower than the previous estimate of 1.9%.

For 2027, the forecast remains unchanged at 1.7%.

Regarding inflation, the central bank anticipates a closing rate of 2.4% for this year, a decline of one-tenth from earlier predictions, with expectations of 1.7% for the following year and an increase to 2.5% in 2027.

The public deficit forecast remains steady at 2.8% for this year and 2.6% for the subsequent year, with public debt projected to reach 101.4% of GDP.

Escrivá also addressed the rising costs of workplace absenteeism, which have surged by nearly 80% since 2015, approaching 15 billion euros.

This increase in absenteeism poses a growing challenge for productivity in businesses, placing Spain among the EU countries with the highest rates of employee absence.

He urged attention from the Banco de España on this issue.

Escrivá clarified that Gavilán’s departure was motivated by personal aspirations for new professional horizons and noted that his resignation was unrelated to the recently released annual report, which has faced criticism for the omission of certain topics initially included.

Escrivá stated his lack of 'democratic legitimacy' to comment on pensions or public accounts, reinforcing the role of central banks in steering clear of public debates on varied topics.