MADRID – Spain's central bank is warning that the political impasse in the country could have negative economic effects.
The warning came Thursday as the bank revised up its 2016 economic growth forecast for Spain to 3.2 percent from 2.8 percent, and maintained estimates for the subsequent two years at 2.3 percent and 2.1 percent.
The bank said a prolonged period of interim government would delay necessary reforms. Acting conservative Prime Minister Mariano Rajoy has headed a caretaker government since December following two inconclusive elections. If there is no government by Oct. 31, a third election will be called.
The bank also said Spain's budget deficits this year and next would be 4.9 percent and 3.6 percent of annual GDP — above levels agreed with the European Union.