The International Monetary Fund improves its growth forecasts for the Spanish economy this year and places it well above the eurozone average. Even so, it estimates that the unemployment rate will remain at 11.6%, three-tenths of a percentage point higher than it predicted in October.

The International Monetary Fund (IMF) announced on Tuesday that it is cutting its growth forecast for all the major eurozone economies for this year and next year, except for Spain, which it predicts will grow by more than double the eurozone average.

Specifically, it has adjusted its estimate for Spanish GDP growth upwards, aligning itself with the 1.9% forecast by the Bank of Spain for this year, while for 2025 it maintains its forecast of 2.1%, more optimistic than the 1.9% predicted by the Bank of Spain.

As for the rest of the eurozone, it lowers gross domestic product (GDP) growth to 0.8% in 2024, and to 1.5% in 2025, one and two-tenths of a percentage point less respectively than in the update published in January.

It also estimates that German GDP growth will be reduced by three-tenths of a percentage point in both years and will only grow by 0.2% and 1.3% respectively. France’s GDP is also expected to fall by three-tenths of a percentage point, to 0.7% this year and 1.4% in 2025. For Italy, the agency maintains its growth forecast at 0.7% for 2024 and revises downwards by four-tenths to 0.7% in 2025. For Italy, the organisation maintains its growth forecast at 0.7% for 2024 and revises downwards by four-tenths to 0.7% in 2025.

As for world GDP, it will advance somewhat more than expected, with a variation of 3.2% in 2024, one-tenth of a percentage point more than in the previous report, and 3.1% in 2025. This improvement is partly due to growth in the United States, which will grow to 2.7% this year, before slowing to 1.9% in 2025.

Stagnating public debt and unemployment

The IMF notes that “inflation could fall faster than expected if the rate of labour activity continues to rise, allowing central banks to advance their easing plans”.

In this context, he predicts that Spain will be the last major euro economy to overcome the inflationary episode. Specifically, it expects inflation in Spain to fall to 2.7% in 2024, down from 3.9% in its previous estimate.

Despite the optimism regarding Spanish GDP growth, the agency does not expect a substantial reduction in unemployment and debt levels until the end of the current decade and points out that the deficit will remain above 3% until 2029.

On the other hand, the IMF expects unemployment in Spain to fall to 11.6% this year and 11.3% next year, compared to 6.5% and 6.4% respectively estimated for the euro area, remaining at around 11% for the following years.

Likewise, public debt, which this year will stand at over 106% of GDP, will only fall slightly in 2025, to below 105%, and will remain so until 2028 and 2029, when it will fall to 104.6% and 104.2%, respectively.

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