The IMF improves Spain's outlook amid trade war

BarcelonaThe International Monetary Fund (IMF) has improved the growth outlook for the Spanish economy despite the uncertainty and the slowdown in global economic activity caused by the trade war initiated by the United States. In this regard, the international organization predicts a slowdown in economic activity worldwide, especially in the United States, which for now will not affect the Spanish economy.

The economic slowdown caused by US President Donald Trump's tariff escalation will have a direct impact on the European economy. According to the report, World economic outlook According to the IMF's quarterly report, the eurozone economy is projected to grow by 0.8% this year and 1.2% in 2026. "Rising uncertainty and tariffs are the key causes of the modest growth in 2025," the report says, highlighting the economic slowdown in countries that share the eurozone currency.

However, the report points to a cause for optimism, which is a possible increase in European household consumption as a result of "real wage growth" and the rise in public spending in Germany, the continent's largest economy, where the Constitution was recently amended to eliminate limits on public deficits. This relaxation and the announcement by the incoming government of Friedrich Merz to increase defense spending and allocate half a trillion euros to a public investment program give the IMF a more optimistic view of the future of the European economy, but not until next year.

As for Spain, the economic institution has again improved its forecast for the state economy, in this case by 0.2 percentage points compared to the figure in the January report, to 2.5%. "Spain's inertia contrasts with the slowdown in other countries," the document states, pointing to the effects of having had, also in 2024, "better-than-expected" macroeconomic results.

Thus, Spain remains for another quarter the most dynamic economy in the European Union, at least among the largest, something that the IMF had already noted in previous reports, including the latest.

Tariffs hit the US

The IMF expects Trump's tariffs to have a negative impact on the US economy. The growth projection for the world's largest economy for this year is 1.8% in the report published this Tuesday, one percentage point below the growth rate recorded in 2024 and 0.9 points below the projection for 2025 in the January report. "The downward revision is the result of increased policy uncertainty, trade tensions, and a weaker demand projection, resulting from slower-than-expected consumption growth," says the document on the United States. The IMF also points out that the tariffs will also slow US growth next year, when it estimates that the US economy will grow 1.7% in a climate of "subdued private consumption."

Across the most advanced economies, the trade war has resulted in a widespread downward revision of the outlook for almost all countries, including Japan, Canada (one of the most affected by political uncertainty, as Trump has threatened to annex the country) and the United Kingdom.

In emerging markets, the growth forecast for China has fallen from 4.6% in the January report to 4%, something that "reflects the impact of the recently implemented tariffs," which have eliminated the positive inertia the Asian giant had had since 2024 and the effects. Likewise, the forecast for China for 2026 also falls, from 4.5% to 4%, compared to the predictions made three months ago.

In India, on the other hand, the IMF forecasts a "relatively more stable" evolution of economic activity than in China. Growth is forecast to slow in most emerging countries, especially in Latin America and the Middle East, as well as in Russia, where activity could fall from 4% growth last year to 1.5% this year if the IMF's predictions come true.

Stock market rebound

Aside from forcing the IMF to revise its forecasts, Trump's trade war has also shaken financial markets. AfterEaster Monday with significant losses in the US Following pressure from the US president on Federal Reserve Chairman Jerome Powell, US stock markets rebounded on Tuesday: at 5 p.m. ET, the Dow Jones gained 2.12%; the S&P 500, 2.13%; and the Nasdaq, 2.47%.