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Spain 2018 Growth Forecast at Risk

Spain 2018 Growth Forecast at RiskSpain 2018 Growth Forecast at Risk

The Spanish economy could grow less than initially expected in 2018 due to uncertainty over Catalonia, Deputy Prime Minister Soraya Sainz de Santamaria said on Friday.

The wealthy region’s intention to break away after a referendum has plunged Spain into its worst political crisis since an attempted military coup in 1981, Reuters reported.

“The events that we are experiencing in Catalonia make us more prudent,” Sainz de Santamaria said after the weekly cabinet meeting.

“In fact, if there were no quick solution to this issue we should be forced to lower expectations of economic growth for the year 2018,” she said. The government expects Spain’s economy to grow 2.6% in 2018.

The deputy prime minister also said that hotel reservations in Catalonia were currently falling 20% to 30%.

She said: “The events that we are experiencing in Catalonia make us more prudent. She insisted: “The Generalitat is creating all the conditions to plunge Catalonia into a deep recession, as experts have warned.”

The warning follows an unofficial referendum on the region’s independence which went ahead despite a government attempt to ban it. The wealthy region’s intention to break away after a referendum has plunged Spain into its worst political crisis.

Catalan leader Carles Puigdemont has come under pressure from one of his key allies to declare full independence and ignore a threat of direct rule from the Spanish government.

Spain’s Prime Minister Mariano Rajoy has given him until Monday to clarify his position—and then until Thursday to change his mind if he insists on a split—threatening to suspend Catalonia’s autonomy if he chooses independence.

Today’s dramatic financial warning came amid reports Spaniards were boycotting Catalan products, with sales of some dropping by up to 70%.

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