The International Monetary Fund projects that Spain’s economy will stall in 2023, though there is a slight uptick in the outlook for the year ahead. In its latest global outlook released during the spring meetings in Washington, the IMF estimates that Spain, which grew 5.5 percent in 2022, will expand by about 1.5 percent in 2023. This marks a modest improvement from the IMF’s January forecast, which had pegged growth at 1.1 percent for 2023. The IMF also trims its 2024 growth forecast by four tenths to 2 percent, reflecting a softer medium-term path for Spain.
Spring projections suggest Spain could be the fastest-growing large economy in the euro area through 2023, with growth nearly double the eurozone average of 0.8 percent. France and Italy are projected to grow around 0.7 percent, while Germany is expected to slow. The 1.5 percent growth forecast for Spain in 2023 aligns with estimates from the Bank of Spain and Airef, though it falls short of the government’s more optimistic 2.1 percent target for the year.
The IMF’s report outlines several key trends: inflation in Spain is expected to ease from 8.3 percent in 2022 to 4.3 percent in 2023 and settle near 3.2 percent in 2024. Unemployment, at 12.9 percent of the labor force in 2022, is projected to remain around 12.6 percent in 2023 and 12.4 percent in 2024.
The IMF warns that the global economy faces a tougher year in 2023 than in 2022. Roughly a third of the world economy could slip into recession as the three largest economies—the United States, the euro area, and China—decelerate in tandem. These cautions come amid the financial turmoil that erupted in the United States in March after the collapse of Silicon Valley Bank.
The IMF notes heightened uncertainty in the banking sector and the collapse of Credit Suisse, describing a fog over the global economic outlook that has dimmed the early 2023 optimism. Inflation remains stubbornly high, and the latest turmoil in financial markets has contributed to a weaker global growth trajectory. The 2023 forecast was revised down from 2.9 percent to 2.8 percent, with an stated risk that the decline could deepen if financial stress intensifies, particularly in advanced economies.
Looking at the longer horizon, the IMF’s baseline scenario assumes that recent financial tensions ease and world growth slows from 3.4 percent in 2022 to 2.8 percent in 2023, before gradually rising to about 3 percent through 2024. The IMF describes this as the weakest medium-term outlook in decades. In a more stressed scenario, growth could weaken further through 2025, with advanced economies bearing the brunt, underscoring the need for cautious policy measures to tame inflation. The report also points to ongoing geopolitical shocks, including the war in Ukraine and growing fragmentation in global economies, as contributing factors to a more fragile global expansion.