He International Monetary Fund (IMF) believe that Spain will be the most dynamic advanced economy in the world in 2024. The latest exercise of macroeconomic projections published this Tuesday improves expectations for progress in Spain’s GDP by half a point and raises the expected growth to 2.9% this year and 2.2% in 2025.
The expected growth figure for 2024 places the Spanish economy in first place among the large industrialized countries, even ahead of the United States (2.8%)which until now was called to lead the rise in GDP in the developed world. Large advanced economies such as Japan (1.8%), the United Kingdom (2.1%), Canada (1.2%), Australia (1.2%) or South Korea (2.5%) will be less dynamic than the Spanish in 2024.
The strong growth expected for this year contrasts with the cyclothymic mood of the large European economies. In Francethe expected growth is 1.1%; in Italy stays in 0.7% and in Germanyafter a 2023 that was recessive, GDP will remain stationary. Within the European block of advanced countries, only Malta, Cyprus and Croatia will see higher growth figures than Spain.
The negative side of this forecast is the data from unemployment. The IMF estimates that next year Spain will continue to be the country with the highest unemployment rate in all of Europe (advanced and developing), only behind Ukraine at war. According to the Monetary Fund, unemployment will still be at 11.2% in 2025, one point above the Government’s forecasts included in the fiscal plan.
Spain’s high unemployment rate is very striking in an economic context in which the Spanish economy is one of the most dynamic in the advanced world. High unemployment is a structural feature of the Spanish productive systemwhich even in periods of strong economic growth such as the years of the real estate bubble, recorded unemployment rates higher than 8%.
Although employment is being created at a high rate, it is mainly concentrated in the migrant population who become part of the active population and, consequently, slows down the decline in unemployment. In other words, Employment is growing at the expense of new workers entering the marketnot that the unemployed are finding work en masse.
In the consensus
The update of the IMF’s forecasts for this year moves in the same line as the latest ones prepared by the main analysts in recent weeks. The forecast is somewhat better than that of the Government (2.7%), it surpasses the OECD and the Bank of Spain (2.8%) and remains slightly behind Funcasthe latest notable body to publish analysis.
Regarding 2025, The IMF estimates that Spain’s GDP will slow downbut it will continue to grow at a faster rate than the average for advanced economies (1.8%). If the forecasts are met, the national economy would advance twice as much as the eurozone as a whole, in which Italy, France and Germany will register growth close to 1% of GDP.
The Spanish economy is experiencing a sweet moment in 2024. Since the year began, analysts have not stopped improving their growth expectations in the face of the positive surprises that have been coming from the macro data. In fact, the improvement in the forecasts that the IMF has undertaken is fundamentally explained because the GDP figures that the INE has published since July (date of the last report from the Monetary Fund) have surprised upwards.
Battle “almost won” against inflation
At the international level, the report presented today by the Monetary Fund gives “almost won” the battle against inflation. Once the episode of price increases that has shaken the world is over, the IMF calls on decision makers to adopt a change in three areas.
The first message is directed to central banks. In an editorial signed by the head of the IMF think tank, Pierre-Olivier Gourrinchas, The organization demands to reduce interest rates until a point that is neutral is found. That is, an official price of money that neither stimulates nor slows down the economy.
The other two messages are aimed at governments and, in particular, those that are most in debt, as is the case of Spain. Gourrinchas points out that countries must stabilize debt dynamics and begin to rebuild fiscal reserves that have been emptied during the pandemic. Unduly delaying fiscal adjustment, points out the Fund’s chief economist, “increases the risk of disorderly adjustments imposed by the market.”
Furthermore, Gourrinchas calls on governments to adopt “structural” reforms“that improve productivity to face challenges such as population aging that a good part of the world economies suffer. Some, the Fund recognizes, will not be easy for societies to accept. Among them, the IMF suggests reforms aimed at working for longer or eliminate rigidities in the labor market.
