By Jesús Aguado
MADRID, March 27 (Reuters) – Spain’s central bank on Friday raised its outlook for economic growth this year to 2.3%, though it trimmed its forecast for 2027 over uncertainty from higher energy prices due to the Iran war and warned that bigger downward revisions were possible.
The Bank of Spain raised its 2026 baseline scenario for growth from a previous forecast of 2.2%. The economy expanded 2.8% in 2025.
The forecast took into account more unfavourable assumptions on energy prices and developments in external markets which it expected to be partially offset by fiscal support measures adopted to mitigate the effects of the war.
Without the impact from the war with Iran the GDP forecast would have been raised to 2.4%, the central bank said.
The bank said it expected GDP to grow by 1.7% in 2027 in its central scenario, compared with 2% without the impact from the war in the Middle East, and lower than a previous forecast in December of 1.9%.
These forecasts are based on the assumption of a relatively rapid normalisation of energy markets, it said.
In a severe scenario of a more sustained rise in energy prices, it expected economic activity to grow by 1.9% in 2026 and 1.1% in 2027.
Spain, one of the countries most visited by tourists, has been outperforming other European economies, helped by domestic consumption and population growth. The ECB expects GDP in the euro zone to expand by 0.9% in 2026 and by 1.3% in 2027 in its baseline scenario.
The Bank of Spain expected inflation to accelerate to 3% in 2026, up from a previous scenario for 2.1%, and to 2.5% in 2027 from 1.9%. In a severe scenario, it sees inflation accelerating to 5.9% in 2026 and 3.2% in 2027.
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by Charlie Devereux and Alison Williams)
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