Torres, Raymond

The impact of the Middle East conflict on the Spanish economy

The conflict in the Middle East has renewed inflationary pressures in Spain through higher energy and commodity prices, further weakening a growth outlook already strained by rising trade tensions. Domestic demand remains strong for now, but a prolonged closure of the Strait of Hormuz would push Europe closer to recession and inevitably also weigh on the Spanish economy.

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Geopolitical risks and the outlook for Spain’sgrowth cycle

The Spanish economy is expected to continue growing
faster than the eurozone in the coming years, although the
expansionary cycle is likely to lose momentum as some of its
recent drivers fade. A sustained increase in energy prices linked
to the Iran conflict represents the most immediate risk to this
baseline scenario.

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