The reason for this uptick is the fact that the economy has demonstrated “greater strength than anticipated,” said Óscar Arce, the Bank of Spain’s head of research, at a news conference.
From now on the pace of growth will gradually slow down, according to the supervisor, which also warned about the risks to the job market from the minimum wage hike and from outside factors that could hurt the economy, including growing protectionism, Brexit, and doubts about the Chinese economy.
The Bank of Spain has calculated that the 22.3% wage increase introduced by the government of Pedro Sánchez could result in the loss of around 125,000 jobs. Arce said that the supervisor, which has faced government criticism over this estimate, used a calculation method backed by a prestigious academic publication to arrive at the number. But Arce admitted that there is no certainty because calculations were made by extrapolating 2017 figures. “We don’t have a crystal ball,” he said.