Spain's economic growth is likely to slow down slightly to 0.5% in the second quarter from a stronger than expected quarterly expansion of 0.7% in the preceding three months, the Bank of Spain said on Tuesday as it raised the whole-year forecast.

In its quarterly outlook update, the central bank expected gross domestic product to increase 2.3% this year, higher than the 1.9% forecast previously, thanks to a booming tourism industry. Last year, the Spanish economy expanded 2.5%.

The central bank maintained its 2025 and 2026 growth forecasts unchanged at 1.9% and 1.7%, respectively.

It raised its forecast for EU-harmonised inflation to 3% this year from 2.7% due in part to higher energy prices, predicting its gradual moderation to 2% and 1.8% in the following two years. (Reporting by Emma Pinedo and Inti Landauro, editing by Andrei Khalip)