Unrest and politics in Catalonia could slow Spain’s economy – from Cos

Band Emma Pinedo and Jesús Aguado

MADRID, October 29 (Reuters) – Unrest in Spain’s wealthiest region, Catalonia, and any further political uncertainty could affect private sector investment decisions, posing another potential risk to the economy, the central bank chief said on Tuesday. .

“As far as the Spanish economy is concerned, the latest data point to a gradual weakening of activity,” Bank of Spain Governor Pablo Hernandez de Cos told a conference, adding that the stalemate Spain’s long-standing politics could weigh on the economic outlook unless elections on November 10 produce a strong government.

“We cannot rule out the possibility that uncertainty about the future development of certain internal economic policies…or recent events in Catalonia, may also have a negative impact, if they persist over time, on the decisions of expenses of private agents”, says de Cos.

Catalonia has been rocked by nearly two weeks of mass, sometimes violent, pro-independence rallies since nine politicians and activists were jailed on October 14 for up to 13 years for their role in a failed secession attempt. in 2017.

Many shops in downtown Barcelona have been closed during the rallies and Spain’s tourism capital is growing increasingly worried about the impact of the unrest on business.

The Catalan crisis has also further complicated the country’s fragmented political environment, just as Spain is preparing for its fourth election in as many years after being without a government or budget for months.

“It is urgent that the elected government has the initiative and enough support to carry out reforms in order to tackle the vulnerabilities that still exist in the Spanish economy and increase its capacity for growth,” said said de Cos, calling for “a broad consensus” among political parties.

Most opinion polls point to a stalemate following the November 10 election, with no clear majority in sight.

The economy has been largely immune to Spain’s political woes, steadily outpacing the average eurozone growth rate in recent years, but its expansion has slowed of late.

Earlier this month, Spain’s caretaker government forecast gross domestic product (GDP) to grow 2.1% this year, down from its previous forecast of 2.2%, and slow to 1.8% in 2020.

Spain’s economy also faced additional risk factors such as Brexit and global trade tensions, de Cos said.

(Reporting by Jesus Aguado and Emma Pinedo; Writing by Andrei Khalip; Editing by Ingrid Melander and David Clarke)

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