Washington (EFE).- The International Monetary Fund (IMF) increased its estimate of growth for the Spanish economy in 2022 by 6 tenths this Thursday, which it now stands at 5.2%, while the prospects for this year lowered one tenth, up to 1.1%.
The agency published a review of its figures and confirmed that Spain will avoid recession this year, at a difficult time for the global economy due to the prolongation of the Ukrainian War.
The improvement in tourism and other services and the increase in employment to levels above those prior to the pandemic explain the improvement in the estimate for 2022, while the lower growth this year will be due, according to the fund, to the increase in prices of prices, the tougher financial conditions and the lower external demand.
The IMF notes that elevated inflation in 2022 was largely due to rising energy prices. The indicator closed the year at 5.7% thanks to the fall in gas prices in Europe and the impact of energy support measures and, according to the IMF, in 2023 it will stand at 3.7%, falling to 2.7% in 2024.
The Fund notes that “uncertainty around the outlook is significant” with downside risks from tighter-than-expected financial conditions, weaker global demand and higher energy price volatility.
But it also points to the possibility that the forecasts improve with an accelerated use of the Next Generation EU (NGEU) funds, which the European Union has allocated to repair the damage caused by the pandemic, and a rapid liquidation of household savings that could boost domestic demand.
This year, the IMF points out, economic activity in Spain has remained resilient “despite the new headwinds posed by the consequences of the Russian invasion of Ukraine” and thanks to the strong rebound in tourism and other services that has supported growth, with employment having exceeded its pre-pandemic level.
“However, high global energy and food prices, weakening growth in trading partners, deteriorating consumer and business confidence, and rising interest rates have slowed the recovery in output. », pointed out the IMF.
Thus, this drop from 5.2% in 2022 to 1.1% in 2023 reflects the effects of high energy and food prices, tighter financial conditions, and weaker external demand.
The IMF “praises” Spain
In any case, the Fund “praises” Spain for the measures approved to alleviate the effects of the rise in energy prices on families and companies and values the steps taken in the 2023 aid package, while insisting on continue with actions to reduce dependence on fossil fuels.
In its analysis, the IMF praises Spain’s economic resilience and strong labor market performance but notes the importance of “flexible and carefully calibrated macroeconomic policies” and the implementation of the structural reform agenda to support sustainable and inclusive growth.
The body welcomes the “moderately contractionary fiscal stance” foreseen in the 2023 budget and emphasizes that in the coming years “a gradual and sustained fiscal consolidation, supported by a medium-term consolidation plan, will be necessary to create space for respond to future shocks.
A strong financial sector
In addition, the IMF highlights the importance of adopting additional measures to preserve the sustainability of the pension system.
He also warned that, despite the fact that the financial sector has resisted instability well, the increase in interest rates will probably erode borrowers’ ability to pay. That is why he calls on banks to remain forward-looking in their assessment of loan quality and to maintain adequate provisioning levels.
The IMF also pointed out the need to improve coordination at all levels of government and with the private sector for the distribution of the funds of the Recovery, Transformation and Resilience Plan and the execution of the NGEU funds.
Calviño values the IMF report
Nadia Calviño, has valued the report of the International Monetary Fund (IMF) and that it “endorses” the economic policy deployed by the Government.
“The IMF report is very positive, it revises the growth forecasts for the Spanish economy upwards,” Calviño pointed out in statements sent to the media.
The report, adds the vice president, “endorses” the Government’s economic policy, above all, the response to inflation, fiscal responsibility and the deployment of investments and reforms of the Recovery Plan “which is already having a significant impact.”