The OECD improves Spain’s GDP in 2021, to 6.8%, but warns of inflation and calls for reforms


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After having suffered the
biggest economic crash globally in 2020
In 2021, Spain will be the country that grows the most in the Eurozone, according to calculations by the Organization for Economic Cooperation and Development (OECD). And it will do so, in addition, at a higher rate than expected by the agency last May, when it estimated that the national GDP would grow by 5.9% this year, a figure that now rises by almost one point, up to 6.8%. The momentum is expected to continue next year as well, when GDP is expected to grow by 6.6%, three tenths more than estimated in the spring forecast. The Government currently estimates that the economy will grow 6.5% in 2021 and 7% in 2022.

However, this
Upward revision is not without risk
, which the organism places “upwards”. The OECD draws attention to a markedly uneven growth, not only between sectors but between countries, and threatened by price tensions in some countries that can add pressure on monetary policies. The OECD also remakes its numbers for Spain regarding the CPI for 2021 and calculates that it will close or, 8 points above the estimate in May, at 2.4%, the highest figure in the Eurozone, only behind Germany, for who is expecting a 2.9% CPI this year.

The tensions in prices will continue, although somewhat more relaxed, in 2022. For Spain, a CPI of 1.9% is expected, at the same level as the Eurozone, but somewhat below the 2.1% from Germany. The basic price indicator, which excludes the impact of energy, radically changes the picture in the euro zone and only places Germany (2%) and France (1.2%) with figures above unity. Spain, in this case, remains behind the Euroza, with 0.4%.

However, the OECD considers that prices in Europe remain at acceptable levels. “Inflation has risen dramatically in the United States, Canada, the United Kingdom, and some emerging market economies, but it remains relatively low in many other advanced economies, particularly Europe and Asia.” Although it warns that these will remain at levels above those registered before the pandemic once they have stabilized. “G20 consumer price inflation is projected to moderate at the end of 2021, remaining above rates seen before the pandemic.”

The OECD notes that economic growth has recovered this year thanks to the support of public policies, the ‘effective’ deployment of vaccines and the minor restrictions that have allowed
many economic activities have been reactivated
. Thus, globally, GDP is forecast to grow 5.7% in 2021 and 4.5% in 2022. “A strong rebound in Europe, the likelihood of additional fiscal support in the United States next year, and lower savings will boost growth prospects in advanced economies, “says the OECD in its forecasts released today.

However, the agency warns that despite the fact that world GDP has already exceeded its pre-pandemic level, “Production and employment gaps persist” and the Delta variant “has reduced short-term momentum” in some countries and “increased pressures on global supply chains and costs.”

The leading body Angel Gurría remember also that they must
accelerate reforms so that stimuli can be effectively drained into the productive fabric
. “Increased public investment and improved structural reforms are needed to boost resilience, and improve prospects for sustainable and equitable growth.” And a way back to fiscal and budgetary stability. «Credible fiscal frameworks that provide clear guidance on the medium-term path to debt sustainability and possible policy changes along that path would help maintain confidence and improve the transparency of budget options, ”he concludes.

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