Despite the third wave of the pandemic and the delay in the vaccination plan, the International Monetary Fund (IMF) has raised its growth forecasts for the Spanish economy to 6.4% in 2021, half a point more than the forecast it released in January of this year, when expectations of an increase in Spanish GDP fell from 7.2% to 5.9%. The multilateral organization maintains the Spanish economy as the most dynamic in the European Union, whose growth has improved from 4.2% to 4.4%, with an increase in GDP much higher than that of Germany (3.6%), France (5.8%) or Italy (4.2%), according to the update of the “Global Economic Outlook” report for the month of April, which the Fund made public this Tuesday.
The ministers of Economy of the euro zone agree to keep the public spending tap open until 2023
The good news for the Spanish economy comes when the Second Vice President and Minister of Economic Affairs, Nadia Calviño, already announced this Monday that the impact of the third wave of the pandemic plus the contraction of consumption due to meteorological phenomena such as that of the storm Filomena would lead to to a downward revision of the government’s economic forecasts for this year, between 7.2% and 9.8%. Calviño specified that there are other positive indicators, such as the world recovery and stimulus programs such as that of the United States, which will have a favorable impact on Spain, especially in the second part of the year.
Although the Fund’s information was embargoed until 2:30 p.m., the President of the Government, Pedro Sánchez, announced an hour before the IMF’s growth forecasts to highlight that Spain is “the developed economy that will grow the most in 2021 along with United States “, and anticipate that the Council of Ministers next week will approve the Recovery and Resilience Plan.
Regarding the world as a whole, the IMF foresees “a stronger recovery in 2021 and 2022 for the world economy compared to our previous forecast, with an expected growth of 6% in 2021 and 4.4% in 2022.” The multilateral organization justifies this rise by “improvements in advanced economies”, especially economic growth in the United States (which advances 1.3 percentage points over the previous forecast), which is expected to grow to 6.4% this year . The US becomes “the only major economy that is expected to exceed the level of GDP that it had forecast in 2022 in the absence of this pandemic.” The forecast for Spain is that in 2022 GDP will grow by 4.7%, almost one percentage point above the European Union (3.8%).
Other advanced economies, including the euro area, will also rebound in 2021, but “at a slower pace,” the IMF notes. Among emerging markets and developing economies, China is forecast to grow 8.4% this year, so that the Chinese economy has already recovered pre-pandemic GDP in 2020, but the agency warns that “it is expected that many other countries do not do so until 2023. ”
95 million more people in extreme poverty
The uneven recovery is going to be a determining factor in the development of economies in the immediate future. According to the IMF, “greater differences will be created in the living standards of the countries” with an average annual loss of GDP per capita during 2020-24 “of 5.7% in low-income countries and 4.7% in emerging markets, while in advanced economies losses are expected to be smaller, 2.3%. ” The main consequence of this loss of income is that it will lead to “95 million more people around the world entering the ranks of extreme poverty.”
The body headed by Kristalina Georgieva also launches a warning message about the labor changes that are coming. “The crisis has accelerated the transformative forces of digitization and automation, making it unlikely that many of the lost jobs will reappear. This requires relocation of workers across sectors, often with severe penalties. wages “.
Although the Fund admits that “swift policy action around the world, including $ 16 trillion in tax relief, prevented much worse results” and that this time it is expected “given that a financial crisis was avoided, it is expected that medium-term losses are less than after the 2008 global financial crisis, around 3% “, emerging markets and low-income countries will suffer more mishaps due to their lower regulatory capacity to act against the crisis. In addition, it also points out that “young and less qualified workers” and “women, especially in emerging market and developing economies” are those who are suffering the most from the economic impact of the coronavirus crisis.
Regarding public aid, the IMF points out that in the labor market they should focus “on the relocation of workers, including through specific hiring subsidies, and on the requalification of workers”, while for companies “it should be consider the possibility of converting previous liquidity aid (loans) into equity-type aid for viable companies, while out-of-court restructuring frameworks should be developed to accelerate potential bankruptcies. ”