Both Spanish officials and the European Commission have dramatically cut their economic growth projections for Spain during 2008 and 2009. On Friday Spain's minister for the economy, Pedro Solbes, slashed his official GDP growth projection for 2008 to 2.3 per cent, down from the previous projection of 3.1 per cent. He expects 2009 to continue at the same pace, with 2.3 per cent growth. Despite the low estimates - which if correct would represent the slowest growth since the recession of 1993 - Sr Solbes projects that unemployment will reach a maximum of 10 per cent.
The EC was even stingier in its revised projections for Spain's economy. It predicts 2.2 per cent GDP growth in 2008 - down from its previous projection of 2.7 per cent - and just 1.8 per cent growth in 2009. Despite the dire figures, Spain's projected growth remains above that of the eurozone (estimated at 1.7 per cent in 2008 and 1.5 per cent in 2009), and above or on par with projections for the entire EU (2.0 per cent in 2008 and 1.8 per cent in 2009).
Both Minister Solbes and the EC expect Spain's inflation to slow down, though Sr Solbes' projections - a rate of less than three per cent by the end of this year - are more optimistic than Brussels' prediction of 3.8 per cent this year and 2.6 per cent in 2009.
The minister and EC officials agree that Spain's budget surplus will continue this year, though at a reduced level, and will disappear in 2009, though the budget will remain balanced.

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