EU Upbeat on Spanish Economy

The independence crisis in Catalonia has only made a very limited impact on the Spanish economy, EU economics commissioner Pierre Moscovici said Thursday.

The blowout from the separatist push by Catalonia has worried economists, with hundreds of businesses relocating their headquarters outside the wealthy northeastern region as the political standoff with Madrid deepens, AFP reported.

“Our central scenario does not include any major potential economic impact from the events in Catalonia, and I observe that, so far, market reaction to these events has been relatively limited,” Moscovici said at a press conference in Brussels as the bloc unveiled its seasonal forecast.

In its latest outlook, the European Commission, the EU’s executive arm, boosted its growth forecast for Spain in 2017 and 2018 to 3.1% and 2.5% respectively.

Back in May, the EU had been expecting a slower 2.8% in 2017 and 2.4% in 2018. But in a sign that trouble could still be coming, the EU said in 2019 it expected a further slowdown to 2.1% in its first forecast for that year.

“While market reactions to recent events in Catalonia have remained contained, the risk exists that future developments could have an impact on economic growth,” the commission forecast said.

Earlier this week, the Spanish Economy Minister Luis de Guindos predicted a slowdown to 2.3% in 2018 because of problems out of Catalonia.

He said that his forecast was “conservative”, quantifying the impact of the crisis at between 0.4 and 0.5 percentage points of growth.

Events in Catalonia are having a worrying impact on Spanish growth, Prime Minister Mariano Rajoy said on Thursday minutes after the European Commission issued a broadly upbeat view of the euro zone’s fourth largest economy.

“It is affecting tourism, it is affecting some entities and it is affecting trade. We have seen some worrying figures,” Rajoy told reporters in the city of Salamanca. That could lead to lower growth, he added.