The IMF cuts Spain’s growth by half a point for this year and lowers the government’s optimism



The optimism of the IMF with the growth forecasts for Spain for this year is also somewhat more moderate than that of the Government. The large international economic body is aligned with the INE’s downward revision (it lowered GDP growth by 1.7 points in the second quarter, to 1.1%) and cuts its growth forecast for Spanish GDP by half a point this year up to 5.7%. They are 0.8 points less than the Government’s forecasts, which, as reported by ABC
considers that the Statistics forecasts were not coherent
with its indicators and that is why it maintains growth this year at 6.5%. The IMF forecasts place our economy in an advance below the world average (+ 5.9%), when in its previous review published in July, Spain was above that line with an increase of 6 ,2%.

The organization also questions the unemployment rate projected by the Executive in the Budgets for 2021 and 2022. Thus, the IMF places unemployment at 15.5% for this year and 14.8 for the next. In the public accounts, the Government predicts 15.2% at the end of this year and 14.1% in 2022.

Despite the hack, Spain will continue to be one of the major economies that will grow the most this year, a fact that was taken for granted after being the most punished in 2020 by Covid, where the collapse was 10.8%. However, the recovery is not as strong. The IMF already places neighbors such as France or Italy, whose setbacks last year were less intense, above. The latter with an increase of 6.3% in Gross Domestic Product, compared to the 5.8% that it marked in its previous report in July.

Thus the things, the IMF also revises upwards the economy of the Eurozone, that already places in a growth of 5% at the end of the year. In July, the forecast was 4.6%. Despite these advances, the organization that leads Kristalina Goergieva, warns that the global recovery momentum is weakening, “hampered by the Delta variant” of Covid-19.

The forecasts for Spain in 2022 are very different. The IMF has revised upwards the forecasts for that period with respect to our country. Thus, Spain expects the coming year to advance 6.4%, 0.6% more than in the last review carried out in July. In this way, the Spanish economy would be the one that would grow the most among the most advanced countries, although it would grow more than half a point less than the Government’s budget.

Danger of inflation

Among other factors, the IMF warns about the incidence of inflation (in Spain it places it at 2.2% this year) that it has in check the supply chain caused by “longer-than-expected interruptions, which is fueling inflation in many countries,” says the agency.

‘Supply disruptions pose another political challenge. On the one hand, pandemic outbreaks and climatic changes have caused a shortage of key inputs and reduced manufacturing activity in several countries. On the other hand, this shortage of supply, coupled with the release of pent-up demand and the rebound in commodity prices, have caused consumer price inflation to rise rapidly in the United States (US), Germany and many emerging market and developing economies ”, clarifies the agency.

The organization is also concerned about the slowdown in growth in less developed economies as a result of the large “vaccination gap” and the great disparities in economic support policies against Covid. “While more than 60 percent of the population in advanced economies are vaccinated and some now are receiving booster injections, about 96 percent of the population in low-income countries remain unvaccinated, “he concludes.

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