Spain slashes GDP growth forecasts due to war in Ukraine

OVIEDO, Spain

The Spanish government dramatically slashed its 2022 GDP growth expectations on Friday, with growth expected to reach 4.3% this year as opposed to the previously forecast 7%.

Economy Minister Nadia Calvino said that the war in Ukraine is the main culprit behind the dampened expectations.

“The impact of the war is causing all the advanced economies to lower their growth expectations,” she said in a press conference. “This is a global crisis.”

The new forecasts suggest Spain’s GDP, which plummeted by 10.8% in 2020, won’t recover to pre-pandemic levels until the first quarter of 2023.

Calvino also predicted that inflation in Spain peaked in March and will start “sharply de-accelerating in the second half of the year.”

“The agreement with the European Commission to bring down wholesale electricity prices will play a huge role,” in slowing inflation, she said, referring to Spain’s impending cap on gas prices.

Spain’s economy grew just 0.3% in the first quarter of 2022 compared to the previous quarter, according to preliminary data released on Friday.

The data showed that household spending dropped by 6.3% compared to the previous quarter, surprising many economists.

In the first quarter of 2022, Spanish consumers had to deal with the rapid spread of the omicron variant, rising prices, and the outbreak of the war in Ukraine, which sent prices skyrocketing even further.

Thousands of Spanish truck drivers went on strike to protest high diesel prices, severely disrupting supply chains and causing shortages of goods.