March 9, 2021

The IMF worsens its unemployment, debt and deficit forecasts for Spain

The IMF worsens its unemployment, debt and deficit forecasts for Spain


The International Monetary Fund (IMF), which last week announced a reduction of one tenth of its growth forecast for Spain in 2018, to 2.7%, it has worsened its forecasts of debt, deficit and unemployment 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 exercises in 1.7% in 2021 and in 1.65% in the two subsequent years.

As for other macroeconomic variables, the international institution has worsened its forecast for the evolution of public debt, which will reach 97.1% of GDP in 2018, when in April it expected 96.7%) to go down to 95.8%. % next year and 94.6% in 2020, compared to 93.9% previously estimated.

The IMF also 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 93% and one year later in the 92.5%, compared to 90.9% of the forecasts for April.

For its part, the revision of the macroeconomic picture for Spain 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 previously a 2% reduction was expected.

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

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, the unemployment rate in Spain 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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