(Bloomberg) -- The Bank of Spain raised its projections for the country’s economic growth this year and in 2025, citing a better outlook for domestic demand.
Gross domestic product is forecast to rise by 3.1% this year and 2.5% in 2025, the central bank said Tuesday in a presentation. In September, it had projected expansion of 2.8% for 2024 and 2.2% for the following year. The 2026 forecast was left unchanged at 1.9%, with growth of 1.7% seen in 2027.
Activity in the second half of 2024 is “more intense” than previously expected, the Bank of Spain said. Reconstruction efforts as well as support measures provided by authorities to face the effects of the deadly floods that occurred in October will lead to a “more energetic” increase in domestic demand in the first half of 2025 than was projected in September.
Spain has been recording the strongest growth among the euro-region’s biggest economies. In a sign of its health, unemployment is hovering around the lowest level in more than 15 years.
Germany’s economy, meanwhile, will hardly grow in 2025 after shrinking again this year, according to forecasts released Friday by the Bundesbank.
In a blow, though, to Spain, floods in the eastern region of Valencia destroyed scores of buildings and large amounts of infrastructure in the nation’s deadliest natural disaster in decades. The government has announced several aid packages to help affected areas.
The central bank also said it forecasts inflation will slow to 2.1% in 2025 from 2.9% this year.
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