One is made of lime, the other is made of sand. HE International Monetary Fund (IMF) lowered its growth forecast Spain This exercise up to 1.5%While maintaining its 2025 target at 2.1%, updating economic forecasts this is what the global financial institution announced this Tuesday. In 2023, with 2.5 percent growth after 2023 Gaining momentum in the last quarterAccording to data from the National Institute of Statistics (INE), IMF forecasts confirm that 2024 will be a year of slowdown.
Even if, Spain’s growth will be above the euro zone averageAccording to IMF estimates, it will be 0.9% this year and 1.7% in 2025. The same thing happens when compared to other major economies in the eurozone: Germany, with a forecast of 0.5% this year and 1.6% next year, with a downward adjustment of four-tenths in both years; France1% and 1.7% with downward revisions of three and one-tenths; And Italy0.7% and 1.1% respectively, with an increase of one-tenth in 2025.
The IMF update shows: Global growth of 3.1% in 2024 and 3.2% in 2025This represents a two-tenths increase this year compared to last October’s forecast. This organization attributes the improving outlook to “greater resilience than expected.” United States of America and fiscal stimulus in China, as well as in many major emerging and developing economies.” The Fund underlines that the global economy has been “surprisingly resilient” to the pandemic, Russia’s invasion of Ukraine and life crisis.
Below historical average
Despite this, predictions for 2024-25 are “These rates are below the historical average of 3.8% for the period from 2000 to 2019.“as a result high interest rates to fight inflation, Withdrawing fiscal support in a high-debt environment slowing down economic activity and low baseline productivity growthAccording to the IMF.
This organization finds in its report: “Inflation is falling faster than expected In most regions, supply side problems disappear and a restrictive monetary policy is implemented.” In this context, the prediction is as follows: The general level of inflation around the world will decrease to 5.8 percent in 2024 and 4.4 percent in 2025.This represents a downward revision of the 2025 forecast.
The fund’s report hopes to: The decline in inflation is faster in developed economies, While inflation is expected to decrease by 2 points to 2.6% in 2024, this rate is higher in emerging markets and developing economies, where inflation is expected to decrease by only 0.3 points to 8.1%.
In conclusion The possibility of a hard landing for the economy has decreased. In the opinion of the IMF, reducing inflation faster “could lead to further easing of financial conditions.” At the same time, unduly loose fiscal policy may lead to a temporary increase in growth, but with more costly subsequent adjustments and more dynamic structural reforms, it may increase productivity and lead to positive cross-border spillovers.
On the negative side, New increases in raw material prices due to geopolitical ‘shocks’ – e.g. constant Attacks in the Red Sea– And supply shocksor greater permanence Core inflationmay extend the duration of restrictive monetary conditions.
At the same time, problems in the real estate sector in China may deepen or instability may arise elsewhere. tax increases and spending cuts They can also cause growth disappointment.
The main short-term challenge, the IMF says, is to successfully manage the eventual decline in inflation, to adjust monetary policy to the underlying dynamics of inflation, and where pressures on prices and wages have clearly dissipated. adjust to a less restrictive orientation.
It also warns that “it should be ensured” given that inflation has fallen and economies are in better conditions to absorb the effects of budget adjustments. renewed interest in fiscal consolidation To rebuild budget capacity and solve problems raising revenue for future ‘shocks’, new spending priorities and halting the rise in public debt.
IMF also recommends applying “focused and orderly” structural reforms Strengthening productivity growth and debt sustainability while accelerating convergence to higher income levels. “The efficiency of multilateral coordination needs to be increased to facilitate debt resolution, avoiding critical situations caused by debts, among other things. excessive debt Creating space for necessary investments and reducing impacts climate change“.