January 26, 2021

The IMF worsens its forecasts for Spain and asks to accelerate reforms – The Province

The IMF worsens its forecasts for Spain and asks to accelerate reforms - The Province


The International Monetary Fund (IMF), which last week announced aOne-tenth reduction of its growth forecast for Spainin 2018, up to 2.7%, it has worsened its debt, deficit and unemployment forecasts for the coming years, underlining the need to give new impetus to structural reforms.

According to the latest forecasts of the institution,Spain's GDP will grow by 1.8% in 2020, in line with its previous forecast, maintaining its projections for the following years in 1.7% in 2021 and in 1.65% in the two subsequent years.

Regarding other macroeconomic variables, the international institutionhas worsened its forecast for the evolution of public debt,that will reach 97.1% of GDP in 2018, when in April it expected 96.7%) to decrease to 95.8% next year and to 94.6% in 2020, compared to the 93.9% previously estimated.

Likewise,the IMF expects Spain's public debt to represent 93.8% of GDP in 2021,above 92.8% of its previous forecast, while in 2022 it will be at 93% and a year later at 92.5%, compared to 90.9% of the forecasts for April.

For its part, therevision of the macroeconomic table for SpainIt also contemplates a worse trajectory of the deficit, which will end this year at 2.7% of GDP, two tenths above that contemplated in April, and will stand at 2.3% in 2019, when it was previously expected a reduction to 2%.

In this way, the projections of the institution point to anegative budgetary imbalanceof 2.7% in 2023, half a percentage point above the deficit of 2.2% of the previously anticipated GDP.

This slowdown in the economy will be reflected in the performance of the labor market, as the new IMF forecasts point to the weakening of the reduction in unemployment, which will close 2018 at 15.5%, in line with the forecasts of April, although at the end of the analyzed horizon theunemployment rate of Spainit will be 13.84%, compared to 13.61% of the previous forecasts.

"In Spain, the agenda of structural reforms that aims to increase the effectiveness of active policies and reduce the segmentation of the labor market, need a new boost," says the international institution.

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