IMF warns of ‘relatively weak’ growth of Spanish economy

“Growth is expected to be relatively weak in the coming quarters due to weak external demand and worsening consumer confidence,” the IMF said in its results from its economic review of the country.

multilateral organization, economic activity “It should recover by 2023″ bidding issues, recovery of high-contact services and accelerating investment in the Recovery Plan.

In this sense, the Fund Use of European funds is “accelerating” and this is a positive thing for Spain, he criticized the “lack of systematic and comprehensive information on enforcement, including from the point of view of national accounting”. This makes it difficult to assess whether public resources are reaching the real economy.

In terms of GDP, The IMF revised its growth forecast for 2022 to 4.6 percent.. This revision is due to the fact that the last forecast published in October did not take into account the latest growth data available for the second quarter, so it was already pessimistic at the time of publication. The forecast for 2023 remained unchanged at 1.2%. In this way, Spain will not be able to regain its pre-pandemic economic level until the beginning of 2024.

The agency warned that the outlook is “subject to great uncertainty and risks are mostly to the downside”. The main risks are energy due to electricity or natural gas prices, but the IMF also pointed to a slower-than-expected slowdown in the world economy.n More significant tightening in financial conditions due to the ECB’s rate hike.

Debt and pensions

At the financial level, IMF technicians feel that public debt remains high and a “continuous” consolidation effort is needed. if so The government’s response was “very effective” in containing the effects of the outbreak.It was also costly, increasing the debt-to-GDP ratio to 118%.

In this sense heConsolidating the primary deficit envisaged in the 2023 interim budget plan by 0.3 points is “appropriate” for the IMF, although it warns that its implementation is subject to sound income and less spending on energy measures.

IMF, a fix 0.6 percentage points per year from 2024 for Spain to achieve a nearly balanced fiscal position by 2030.

Regarding pensions, the IMF considers them necessary “Additional measures” to counter future spending growth from indexation to inflation. By 2050, the result of this measure is to increase pension spending by 3.25% of GDP.

The agency warned that “only some” of this increase will be offset by other measures adopted in the first phase of the reform. In addition, measures taken in 2022 such as the reform of the bonus system for the self-employed “could have a positive financial impact”, but that depends on their design.

IMF results

Among the conclusions reached by the IMF are: Labor productivity levels and growth rates in Spain has lagged behind similar economies in recent years. The IMF considers this to be due to cross-cutting factors such as the prevalence of SMEs, the high incidence of temporary employment and skills mismatches in the labor market.

In this sense, the IMF positively evaluated the ‘Starting Law’ and the ‘Create and Grow Law’, as well as the reform in the vocational education system. In addition, it was noted that “more effort” is needed to address the “high number” of regulatory thresholds associated with company size and regulatory differences between regions.

Regarding employment, the IMF evaluated the labor reforms approved in December 2021 and said they “provided positive results in terms of permanent employment growth”. However, they also said it was “too early” to assess its final impact.