IMF cuts Spain’s growth forecast to 4% this year and 2% in 2023

Spain will continue to be the first of the major euro economies in terms of growthalthough its downward revision is the largest after Germany.

Moreover It will grow more than the average of euro area countriesAccording to forecasts, it stands at 2.6% this year and 1.2% next year.

In the update of the IMF’s “Global Economic Perspectives” report, the Spanish economy It will grow at a slower rate in 2023When the increase in Gross Domestic Product (GDP) will be 2%, it is 1.3 percentage points lower than previously estimated.

War in Ukraine halted recovery

Last April, in the first forecast since Russia’s invasion of Ukraine that began in February, the IMF cut its economic growth forecast for Spain by one point to 4.8%, one-tenth of the current forecast.

Spain was rebounding with a 5.1% growth in 2021 after the 10.8% drop in Spanish GDP in 2020 due to the epidemic, which is among the worst among developed countries.

But after the conflict dragged on, Outlook for European economies “more negative than expected”High energy prices, weak consumption and slow industrial activity in the face of persistent supply chain disruptions and rising production costs, the IMF says.

Spain is therefore affected by the evolution of its main trading partners, many of which are more clearly exposed to the consequences of the conflict due to their greater dependence on Russian gas.

Thus, the organization led by Kristalina Georgieva revised down this Tuesday. Growth projections for Europe’s two main economies – Germany and France –they are precisely Spain’s main trading partners.

Together in 2021, they represented 26.4% of Spain’s total exports, whose GDP depended on 26.89% of its foreign trade that year.

Germany suffers a bigger drop in estimates than Spain0.9 points and the international organization now expects its GDP to increase by only 1.2% in 2022. In the case of France, the growth forecast is 2.3%, six-tenths less than previous forecasts.

Italy, the only country that survived the fall and these forecasts will record seven-tenths growth, with a 3% growth in forecasts, even before the country’s strong political crisis following the resignation of Prime Minister Mario Draghi.

The IMF also warned of the possible consequences of a complete demise of Europe. Russia’s natural gas exports to European economies He said that “inflation will rise significantly” with the rise in energy prices.

It also encouraged European governments to take measures to contain inflation, including implementing a tighter monetary policy that “will inevitably have real economic costs” but whose delay will “make them worse.”