The IMF revises upward the growth forecast for Spain this year

The organisation predicts a faster exit from the crisis than in 2009

2 min
IMF economist Gita Gopinath, in a picture from last December

The International Monetary Fund (IMF) has revised its 2021 growth forecast for the Spanish economy and has been optimistic about the partial recovery of the world economy this year, despite warning of the danger of divergences between rich and poor countries and increasing inequalities.

Specifically, the Fund's forecast for Spain goes from a 5.9% to a 6.4% growth of gross domestic product (GDP) compared to its last forecast published in January, while that of the world economy as a whole remains the same, at 4.7%. Thus, if they are met, the Spanish economy will be one of the fastest growing this year among developed countries, only behind the rates of the United States.

Spanish growth will exceed that of France, which the IMF estimates at 5.8%, but also Italy and Germany, with 4.2% and 3.6%, respectively. For the Eurozone, the agency expects an increase in economic activity of 4.4%, according to its quarterly report World Economic Outlook published on Tuesday.

Looking ahead to 2022, the institution chaired by Kristalina Georgieva is also optimistic. It expects a growth of 4.4% for the planet - two tenths above the forecast made earlier this year - while Spain's GDp would increase by 4.7%, the same figure as Canada and only surpassed among industrialised economies by the United Kingdom.

Despite the good omens, it should be borne in mind that in 2019 Spanish GDP plummeted with a historic fall of 10.8%. In any case, this is the largest drop suffered by the state economy since the Civil War. This means that the recovery, in percentage terms, is stronger than in countries where less activity was destroyed, so there is less ground to recover.

Moreover, the IMF forecasts are considerably more pessimistic than those of the Spanish government, which last October put the possible growth for 2021 at 7.2%, 1.3 points higher than the figure provided by the IMF.

Faster recovery than in 2009

The IMF report notes that the economic impact of the pandemic will not be as severe as during the previous crisis, caused by the collapse of the financial system in 2008. "Scars will be smaller," says the document, led by the institution's chief economist, Gita Gopinath. A rapid policy response in terms of fiscal and monetary stimulus has been one of the keys to avoiding a major economic meltdown.

In the wake of the previous crisis, the most advanced economies and, above all, the European economies took almost a decade to attain the GDP levels prior to the outbreak of the recession - in some cases even longer - which does not seem to be the case this time, despite the fact that Spain and the euro area have suffered more than other countries.

In this sense, according to the data provided by the IMF, the Spanish economy will not fully recover until at least 2023. At this point, therefore, they coincide with most forecasts that predict a slower recovery for Spain and the wider Eurozone due to the strong hit suffered in 2020. In contrast, the US, the UK and Japan will overcome the crisis by next year, according to the international body. As for China, the IMF says that it has already surpassed pre-pandemic levels of GDP.

The organisation proposes a scenario of growth at a global level thanks to the boost in the recovery of the three main world economies: the United States (thanks to the public investment plan approved by Congress), China and Japan. However, it also highlights marked divergences between rich and poor countries and, within economies, between sectors, which may lead to an increase in inequalities, an aspect that has been of particular concern to the agency of late.