Bank of Spain Governor Pablo Hernandez de Cos says unrest in Spain’s wealthiest region of Catalonia and any further political uncertainty could affect private sector investment decisions, posing another potential risk to the economy.
Saying the latest data points to a gradual weakening of activity, de Cos added that Spain’s long-running political stalemate could weigh on economic prospects unless the Nov. 10 election produces a strong government.
Most opinion polls point to a stalemate after the election, with no clear majority in sight.
The economy has largely been immune to Spain’s political woes, steadily exceeding the euro zone’s average growth rate over the past few years, but its expansion has slowed of late.
Spain’s caretaker government earlier this month forecast gross domestic product (GDP) would increase 2.1% this year, down from its previous forecast of 2.2%, and slow to 1.8% in 2020.
The Governor also said Spanish economy faced additional risk factors such as Brexit and global trade tensions.