Bank of Spain has published its Annual Report for 2021

Bank of Spain Governor Pablo Hernandez de Cos Credit: Bank of Spain

THE Bank of Spain has published its Annual Report for 2021 which also looks forwards to 2022.

Released on May 18 with a foreword by Bank Governor Pablo Hernandez de Cos, it outlines the situation that saw the country recover from the pandemic and obtain significant financial support from the European Union.

Rather than concentrate on what has been, it is important to look at the future and the Bank now concurs with the recent observations from the European Commission that the economy will grow more slowly than expected.

Originally forecasting a growth of 7 per cent, the Russian invasion of Ukraine which has helped to add to the dramatic rise in energy costs has seen inflation rocket which in turn meant that in April the government reduced growth forecast to around 4.5 per cent.

In his review however de Cos has admitted that even this may be optimistic and that he wouldn’t be surprising if it dropped further to 4 per cent.

This is born out by a statement in the report which says “in the absence of any additional considerations, this would lead to a mechanical downgrading of about half a percentage point in the average GDP growth rate in 2022”.

Currently, it is very difficult to make accurate forecasts due to the Russian government whose actions are not predictable and current belligerence towards NATO members and those wishing to join could easily affect the economy during the second half of 2022.

With constantly increasing inflation, the rest of the year could be difficult for the whole of Europe although the capping of electricity prices may benefit Spain.

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