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The government trimmed its GDP forecast for 2018 to 2.3 percent
from 2.6 percent last month due to concerns about economic
fallout from the country's worst political crisis in four
decades.
"It is affecting tourism, it is affecting some entities and it
is affecting trade. We have seen some worrying figures," Rajoy
told reporters in the city of Salamanca.
That could lead to lower growth, he added, referring to last
month's cut in the forecast.
But in a regular outlook for European states issued in Brussels
on Thursday, the EU executive edged up its 2018 projection for
Spain by a tenth of a percentage point to 2.5 percent.
While acknowledging the risk of fallout from the crisis, the
Commission also raised its 2017 view to 3.1 percent -- in line
with that of Rajoy's government -- from 2.8 percent.
Speaking in Madrid, Spanish Economy Minister Luis de Guindos
said that if the situation in Catalonia improved in coming
weeks, the government might edge its 2018 forecast up again.
Catalonia's secessionist push has led to an exodus of businesses
from the region and hit Spanish assets.
The Commission said market reactions to events in the region had
remained contained.
"The risk exists that future developments could have an impact
on growth, the size of which cannot be anticipated at this
stage," it said. However, growth could benefit from "a stronger
than expected contribution from net exports."
The Commission said it expected Spain would cut its budget gap
this year and next, narrowing it to 2.4 percent of GDP next to
drop well below a limit of 3.0 percent set by European Union
finance ministers.
The economy's Achilles' heel -- unemployment -- would plummet to
14 percent by 2019 from a peak of close to 26 percent in 2013,
it said.
(Reporting by Tomas Cobos and Carlos Ruano,; Writing by John
Stonestreet; editing by Jesus Aguado)
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