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Spain may grow more than 3.1 percent in 2016; will miss 2017 deficit goal
October 8, 2016 / 6:44 PM / 10 months ago

Spain may grow more than 3.1 percent in 2016; will miss 2017 deficit goal

People look at fans inside a shop in central Madrid, Spain August 25, 2016.Andrea Comas

MADRID (Reuters) - Spain's economy may grow by more than 3.1 percent in 2016, up from the current official target of 2.9 percent, despite political deadlock, acting Economy Minister Luis de Guindos told reporters in Washington on Saturday.

"My understanding is that we will beat this forecast, the accurate (figure) will be better than the forecast from the International Monetary Fund," De Guindos said on the sidelines of an IMF and World Bank meeting in Washington.

The International Monetary Fund on Tuesday increased its 2016 growth forecast for Spain to 3.1 percent from 2.6 percent. It also increased its 2017 forecast by 0.1 of a percentage point.

Spain is growing at one of the fastest paces in the euro zone despite nine months without a government, after two inconclusive elections.

However, De Guindos recognized Spain would miss its public deficit target of 3.1 percent of national output for 2017 as it has been unable to draw up a new budget for next year due to the political limbo.

This will force the caretaker conservative government to roll over the one for 2016, which does not contain new measures demanded by Brussels to trim the fiscal gap.

Spain overshot its target by a wide margin in 2015, and the European Commission relaxed its deficit goals to give the country until 2018 to get the budget gap down to below 3 percent of output, instead of by this year.

Reporting by Jesús Aguado; editing by Robert Hetz and Andrew Roche

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