The new restrictions due to the explosion of infections and the slowness in the administration of vaccines make a dent in the forecasts of economic growth in Spain. The International Monetary Fund (IMF) has lowered the forecast for an increase in Spanish GDP for 2021 by 1.3 percentage points, leaving it at 5.9% compared to the 7.2% expected last October. The fall contrasts with the economic performance of the world, where the Fund’s forecasts have been revised upwards by 0.3 percentage points with respect to the previous forecast to achieve growth of 5.5% in that year. However, our country is aligned with the forecasts of the European Union, which loses one percentage point compared to the October forecast and reduces growth in 2021 to 4.2%, according to the update of the “Global Economic Outlook” report that the Fund has made public this Tuesday.
The IMF estimates that Spain will not reduce unemployment during 2021
In this review, the multilateral body headed by Kristalina Georgieva reduces the fall in Spanish GDP in 2020 to 11.1% (it remains one of the worst hit economies in the world), compared to the 12.8% it had forecast three months ago , and raises Spanish growth by 0.2 percentage points in 2022, to 4.2%. Except for the United States, the forecast for advanced economies is tenths higher than the IMF had last October, a more positive view of weak growth for Europe in 2021.
The Fund adds that “the recovery in growth forecast for this year comes after a severe collapse of the world economy in 2020. Although the estimated decline (-3.5%) is somewhat less severe than we had previously forecast (- 4.4%) due to stronger-than-expected growth in the second half of last year, it remains the worst global peacetime contraction since the Great Depression. ”
“The increase in infections at the end of 2020 (including those derived from new variants of the virus), the resumption of closures, logistical problems in the distribution of vaccines and the uncertainty about their acceptance are important counterpoints to the favorable news. Much remains to be done on the health policy and economic fronts to limit the persistent damage of the serious contraction of 2020 and guarantee a sustained recovery, “says the report of the multilateral organization.
Within the Euro economies, Spain is not the one that is most affected in this revision of the IMF’s economic forecasts. The multilateral body reduces Italy’s growth by 2.2 percentage points, which will only increase by 3%, while it reduces Germany’s GDP by 0.7% by 2021, placing the rise at 3.5%, and reduces by half a point percentage the outlook for the French economy, which will grow 5.5% this year. Despite the reduction, Spain will be the country that will grow the most in 2021 among the main economies in the euro zone, according to the fund’s forecasts.
However, in the advanced economies as a whole, the evolution of the Eurozone is depressing. The US forecast for 2021 has been revised upwards by two percentage points, with growth of 5.1%, “reflecting the drag from the strong momentum of the second half of 2020 and the additional support of the fiscal package of December 2020 “. Regarding Japan, the forecast increase has been 0.8 percentage points, with a GDP increase to 3.1% by 2021, which according to the Fund is due “to the additional boost of the fiscal measures introduced at the end of 2020” .
The IMF explains that this “large divergence largely reflects differences between countries in behavioral and public health responses to infections, the flexibility and adaptability of economic activity to low mobility, pre-existing trends, and rigidities. structural entry into the crisis “.
Regarding emerging economies, the multilateral organization points out that “a considerable differentiation is expected between China – where effective containment measures containment measures, a strong response from public investment and the support of the central bank’s liquidity have the central bank have facilitated a strong recovery, and other economies. ”
The forecast is that China will grow by 8.1% in 2021, practically maintaining the forecasts of October, with India being the emerging economy that will explode this year with a GDP increase of 11.5%, 2.7 percentage points more than in the forecast of the last October, while Russia will see its economy grow by 3%; Brazil, 3.6%; and Mexico, 4.3% in 2021.
Problems for tourism
The IMF advises that “oil exporters and tourism-based economies face particularly difficult prospects, given the expected slow normalization of cross-border activity, the normalization of cross-border travel, and the bleak prospects for cross-border business. oil prices “. A clear warning for Spain where 14% of GDP depends on tourism.
As the main risks to the global economy, the Fund warns that “growth could be weaker if the wave of viruses (including new variants) proves difficult to contain, infections and deaths increase rapidly before vaccines are widely available , and the voluntary distancing or blockages are stronger than expected. ”
The Fund pays special attention to vaccines, which it sees as a clear source of “boosting the confidence of companies and households, which would generate a greater recovery in consumption, investment and employment, and companies would hire and expand their capacity in anticipation of increased demand “, but also warns of the strong economic impact that may mean that” the deployment of vaccines suffers delays, that generalized indecision makes their adoption difficult or that immunity is shorter than expected. ”
The IMF also warns of “the intensification of social unrest, due to greater inequality and unequal access to vaccines and therapies.” It also warns that it could be a mistake “if political support is withdrawn before the recovery is consolidated, as it could increase the bankruptcies of viable but illiquid companies, causing further loss of employment and income. The consequent tightening stricter financial conditions could increase refinancing risks for vulnerable borrowers and add to the already high number of economies with debt problems and increase insolvencies between companies and households. ”
As has already happened in other IMF forecasts, it is recalled that the pandemic “will reverse the progress made in reducing poverty from poverty in the last two decades. It is likely that about 90 million people will fall below the threshold. of extreme poverty during 2020-21 “.