IMF downgraded the growth forecasts for Spain

The lack of agreement on a new government and the Brexit risk are two factors that have made the International Monetary Fund forecast the figures to reconsider the growth in Spain.

The body chaired by Christine Lagarde downgraded by one tenth the growth forecast for this year of 2016 in Spain, placing them at 2.6% of the GDP, a figure of four tenths below the target set by the government in office. The data on the alarms due to the difficulties it is having the executive to move forward with the public deficit targets imposed from Brussels.

“It is projected that the growth in Spain is smooth, even above the average of the euro zone”, as announced at the beginning of the spring meeting of the agency and the World Bank (WB).

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The previous year ended with a difference in the public accounts of 5%, almost one point above the 4.2% agreed with the European Commission. For the year of 2017, the IMF (International Monetary Fund) keeps intact the January forecast. The analysts believe that the Spanish economy will grow by 2.3%. The data represent a reduction of a decimal regarding the anticipated in January of this year and left unchanged the projections for the year 2017. However, it involves a change of the trend in the estimates of the Fund for the Spanish economy, after several consecutive semesters of the upward revisions. The prognosis of the institution led by Christine Lagarde is lower than the forecasts of the Spanish government, which placed the estimated year 2016 with a growth at 3%.

 At that time Spain was one of the few countries for which the International Monetary Fund (IMF) raised the growth numbers for this year and the next, even though the agency had cut its global growth forecasts.

In January there was still a hope for a solution soon to the situation of the Spanish government, despite the time of the political uncertainty that crossed and continues across the country given the difficulties existing to form a government after the last general election.

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The IMF (International Monetary Fund) had improved its forecast for the euro zone; by a tenth to 1.7% in the year 2016 with projections remain the same in 2017, because in the region of the single currency strengthening of the private consumption, due by the decline of the oil prices and the financial conditions favorable of the offset of the weakening of net exports.

Similarly, the IMF (International Monetary Fund) anticipates that the unemployment rate will continue its gradual decline in Spain down to 20% this year, with an estimated rate of 19.7% at the end of the year 2016 and 18.3% at the end of the year 2017. The inflation, meanwhile, will remain in the negative territory in the year 2016, with -0.4%; and it is not expected to rebound until the year 2017, when it will rise to 1%.

Spain will remain the economy of the euro zone for the fastest growing of the four largest, up from 1.5% in Germany and 1.1% in France (both two tenths less than in January), and 1 % of Italy (three tenths less than three months ago). In Portugal it is expected that the activity will slow to 1.4% this year and 1.3% next year, while in Greece, after a contraction of 2.6% in the year 2016, is expected to return to the positive territory with an increase of 2.7% in the year 2017, according to the Fund.

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Meanwhile, the eurozone economy will grow by 1.5% this year and 1.6% in the year 2017, two and one tenth less, respectively, than predicted three months ago.

“The weak recovery of the economy of the euro will continue in the years 2016 and 2017, with the drop in the external demand offset by the favorable effects of the lower energy prices by decreasing the oil prices, a slight fiscal expansion as the financial conditions accommodative” said the report.

As the growth is expected to remain weak as a result of the legacy of the crisis are felt in the high private and public debt, the low investment and the erosion in the training of the workers due to high long – term unemployment. For this reason, the IMF (International Monetary Fund) stressed the importance of deepening the monetary stimulus policies, as applied by the President of the European Central Bank (ECB).

Of course, insisted that the central banks should have the support responsibility to address the current challenges. “The those with fiscal room should delay as much as possible its use and insists that the investment in the infrastructure, the current low levels in the interest rate, should be regarded as attractive” also he noted in the IMF (International Monetary Fund).

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