San Francisco Frontiers - IMF sees 'limited' impact of floods on Spain GDP growth

The European country is reeling from the October 29 disaster, which killed 228 people, washed away roads and rail lines, submerged fields, and gutted homes and businesses, mainly in the eastern Valencia region.

"Our assessment is that the economic impact was quite localized, and damage to key infrastructure, such as transport infrastructure, highways and also damage to industry, has been relatively limited," IMF spokeswoman Julie Kozack told a news conference.

"Our preliminary assessment is that the impact on growth for the overall Spanish economy would be limited," she added without giving an estimated cost of the flood damage.

The European Union's fourth-largest economy has been growing faster than the eurozone average this year after recovering from the Covid-19 crisis, providing vital political oxygen to its often beleaguered minority left-wing government.

In its latest forecasts published in October, the IMF predicted Spain would grow by 2.9 percent this year, one of the highest levels in the EU.

Kozack said any potential impact of the disaster on Spain's "quite robust" growth will be reflected when the Washington-based body updates its forecasts in January.

The Bank of Spain said on Wednesday that the floods were likely to knock 0.2 percentage points off the country's gross domestic product in the last quarter of the year.

In September, the government revised its 2024 growth forecast up to 2.7 percent from 2.4 percent. It has so far not changed its estimates in the wake of the floods.

C.Lewis--SFF