MADRID, Nov 4 (Reuters) – Spain’s economic recovery is poised to continue in the short run, but is at risk of slowing down if the ongoing disruption in global supply chains and surging inflation last longer than expected, the Bank of Spain said on Thursday.
“This increased persistence (in supply bottlenecks) could lead to a spill-over of cost increases into final prices and wage demands, leading to a more intense sustained inflation surge than currently anticipated,” the central bank said in its bi-annual report.
Spanish inflation surged to a 29-year high in October, while the economy expanded less than expected in the third quarter.
Last month, the central bank governor said higher energy prices could prompt a “significant downward” revision of its 2021 growth estimate of 6.3%.
The bank did not provide concrete forecasts in Thursday’s report, saying only it expected the economy to recover in the short term thanks to Spain’s efficient vaccination campaign which has led to fewer restrictions to cope with COVID-19.
(Reporting by Jesús Aguado and Emma Pinedo; editing by Andrei Khalip)
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