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C. P. S.
Madrid
Thursday, 10 April 2025, 09:12
Donald Trump's trade war in America will have an impact on the global economy and, obviously, also on that of Spain. For this reason, the governor of the Bank of Spain, José Luis Escrivá, announced on Wednesday that the institution will revise its economic forecasts downwards due to the recent policy changes on tariffs made by the president of the United States.
"We will have to revise the growth forecasts downwards. In the case of the Spanish economy, our last forecast was 2.7%, which is high growth for the Spanish economy. What is logical is that we will lower it and what I cannot say right now, because we have not yet done so and because it is not easy to do, is by how much", said Escrivá.
Speaking to Spanish television station TVE, however, Escrivá stressed that any revision of the forecasts "will be subject to some very large elements of uncertainty", as "there are elements for which we really do not have sufficiently powerful analytical instruments to be able to assess them."
The governor gave assurances that the institution is "closely and directly monitoring" the situation, which he described as "extraordinarily complex from an economic and geopolitical point of view."
"We know that what is happening has the potential to generate very negative effects on economic activity in the world in a very asymmetric way, but it is also true that we still do not have precise details as to how it is going to materialise and to what extent and in what time sequence."
Escrivá said that this "supply shock" that Trump has generated with his policies is "very hard" and has "the potential to generate sharp falls in economic activity or a slowdown in those economies" such as the Spanish economy that is growing at "relatively high" levels. "But I would not speak of recession in any case, although I would say that this is going to have some impact on economic activity," said Escrivá. He further pointed out that the countermeasures being rolled out to counteract Trump's manoeuvres will "have the effect of raising prices."
"These are the most obvious aspects, but there are aspects that are more difficult to grasp that can make the situation more complex. On the one hand, there is not only an increase in tariffs, but what may be in question is the functioning of the value chains and supply chains with which world production has been internationalised, and this may generate segmentations in trade and disruptions", he stated.
This additional negative effect on global economic activity would come at a later stage and is difficult to assess, according to Escrivá, who added that, beyond the direct effects generated by this situation, there is also a confidence effect. "When markets and consumer and investor sentiment is affected by such disruptive situations, there is the potential for spending decisions to be reined in. And this can also happen with some delay. All of this makes it very difficult for us to put numbers on what impact this situation is having or is going to have on both economic activity and inflation," he remarked.
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