Spain trims GDP growth target for 2019 and 2020

MADRID (Reuters) - Spain's acting government trimmed its growth forecasts on Tuesday as part of draft budgetary plans submitted to the European Commission and raised a deficit estimate, at a time when political gridlock prevents Madrid from having much margin of maneuver on budgetary matters.

The government said in the document that it expects economic output to expand by 2.1% this year, down from a previous forecast of 2.2%, and by 1.8% next year after a previous forecast of 1.9%.

The Economy Ministry said that the cut in the growth forecast was "almost completely" due to a change in the methodology of how Spain calculates its gross domestic product.

Spain has mostly had caretaker or minority governments for years, meaning the budget has often been simply rolled over from one year to the next.

There is a caretaker government since an inconclusive parliamentary election in April and Spain is holding new elections on November 10th. The Economy Ministry said the forecast for 2020 could be revised if and when Spain is able to form a government and pass a budget in parliament.

Spain left the budget deficit forecast unchanged from a target set for 2% of gross domestic product (GDP) this year, but raised it to 1.7% of GDP from a previous 1.1% for 2020.

This takes into account the fact that new taxes, including on global tech companies, planned earlier this year could not be adopted in parliament.

The figures sent to Brussels include a 0.9% raise in state pensions and a 2% in public workers' salary, but otherwise largely keeps the budget approved by the former, conservative government of Mariano Rajoy in 2018, largely unchanged.

In a recent TV interview, acting Prime Minister Pedro Sanchez said that, if elected next month, he aimed to get a budget approved by parliament in the first quarter of 2020.

Spain's economy expanded by more than 3 percent every year from 2015-2017 after a five-year economic slump ended mid-2013, but the expansion has now started easing.

(Reporting by Andres Gonzalez and Belen Carreno; Editing by Ashifa Kassam and Ingrid Melander)