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Spain hikes growth forecast despite lack of a budget

Spain hikes growth forecast despite lack of a budget

MADRID: Spain’s government on Tuesday hiked its 2018 growth forecast to 2.7 percent from 2.3 percent previously as it unveiled an overdue budget draft for this year which it however lacks parliamentary support to adopt.

The new prediction is a sign the Spanish economy remains unaffected by a political crisis in Catalonia which has unnerved investors and prompted hundreds of companies to move out of the restive region or review investment plans there.

The economy ministry said the new forecast was the result of easing political uncertainty and expectations that the world and European economies would expand more than initially thought in 2018.

Credit rating agency S&P last week raised Spain’s sovereign credit rating to A- from BBB+ and kept its outlook positive saying the Spanish economy would expand faster than the rest of the euro zone while the budget deficit would keep shrinking and the overall economic performance would likely not be hampered by the situation in Catalonia.

 While the Catalan crisis has not weighed significantly on the economy, it has brought to a halt parliamentary activity in Madrid as the many parties forming the national assembly are divided on how to deal with the issue.

The Basque nationalist party PNV, which votes are needed to pass the budget law, has said it would not help pass the bill until the government resolves the situation in Catalonia.