The IMF lowers its growth forecasts for Spain in 2021 (4.6%) and 2022 (5.8%)
The International Monetary Fund (IMF) has significantly reduced its growth expectations for the Spanish economy in 2021 and 2022, reducing the expected expansion of GDP this year to 4.6% from the 5.7% expected last October, while for next year he forecasts that the rebound activity will be limited to 5.8%, six tenths of a percentage point less than expected.
The IMF’s forecasts are thus close to those published recently by the Bank of Spain, which forecasts growth of 4.5% this year and 5.4% the following year, moving away from the government’s macro picture, which maintains the growth forecast of 6.5% in 2021 and 7% in 2022.
According to the IMF’s preliminary findings following its Article IV visit to Spain, the Spanish economy continues to recover from the deep recession caused by the pandemic, with a GDP contraction of 10.8% in 2020, although production still remains below the pre-pandemic level, in part due to the continued impact of the pandemic on sectors with high personal contact intensity and bottlenecks in supply chains. global supply.
In their analysis, staff believe that private consumption continues to be the main driver of short-term growth in Spain, supported by a strong recovery in the labor market and a normalization of household savings.
IMF expects investment to strengthen in 2022, supported by robust demand, continued favorable financing conditions, gradual removal of bottlenecks in global supply chains, and faster deployment of funds Next Generation EU (NGEU). The IMF mission estimates that the cumulative impact of NGEU funds on Spain’s GDP could be between 1.5% and 2% by the end of 2022.
In addition, the International Monetary Fund (IMF) is warning the Spanish government against pension reform, which will make the system more unsustainable if additional spending and revenue measures are not taken. He stresses that “the pension reform has prioritized social acceptability and adequacy, but concerns remain about sustainability if additional measures are not implemented”. The organization specifies that the measures approved in the first package alone, which will enter into force on January 1, will result in an increase in expenditure of 42,000 million euros, or some 3.5 points of GDP.
The international organization warns against the medium-term effects of indexing pensions to the CPI on the one hand, and the abrogation of the sustainability factor on the other. It should be remembered that currently, state expenditure on pensions stands at 13 percentage points of GDP, although once the effects of the on-going reform have been rolled out, this level would rise to 16.5 % of GDP.