The Albany Gazette - Spain raises 2026 growth forecast despite Mideast war turmoil

Economy Minister Carlos Cuerpo pointed to the "momentum" of the economy to justify the improved outlook, saying growth of around 0.64 percent was expected in the second quarter.

The European Union's fourth-largest economy has comfortably outperformed its peers in recent years, recording 2.8 percent growth last year and 3.5 percent in 2024, fuelled by consumer demand, exports and tourism.

The Bank of Spain forecasts 2.3 percent growth this year amid fears of a slowdown linked to the Iran war, while the International Monetary Fund predicts 2.1 percent.

"We have dynamic growth, a more resilient economy capable of coping with shocks with more flexibility than in previous circumstances or occasions," Cuerpo told a press conference.

Iran's closure of the Strait of Hormuz in response to US-Israeli strikes sparked volatility on global energy markets and pushed inflation up worldwide.

But Spain's National Statistics Institute said Monday that inflation remained at 3.2 percent in June for the third straight month, even as electricity and gas prices increased year-on-year, according to provisional data.

The government put in place measures worth five billion euros ($5.7 billion) in March to cushion the blow on households and businesses, including tax cuts and a direct subsidy for the hardest-hit sectors.

On Monday, the cabinet approved the continuation of support for agriculture and transport, but VAT cuts on fuel are due to end from July.

(K.Lee--TAG)