The International Monetary Fund (IMF) now believes that the gross domestic product (GDP) grew by 4.9% in 2021. This is an upward adjustment, of three tenths, which shortens the distance with the forecast of the Government macroeconomic picture (+6.5%), but still more pessimistic. As for this year, he expects the Spanish economy to lead growth among advanced countries and estimates that GDP will grow by 5.8% this year. Thus, the IMF maintains its forecast for this year with respect to the one published at the end of December. Although the organization is optimistic about the evolution of Spain compared to other economies, the truth is that the increase is 1.2 points below the estimate by Moncloa (7%).
It is noteworthy that the last update of the Government’s macroeconomic chart occurred in September, when omicron and the sixth wave were not considered. However, the IMF published its calculations for Spain about a month ago, in Article IV in which it reviewed the country’s economic and fiscal policy. In this sense, the IMF forecast is closer to the one recently published by Funcas, which estimated growth for this year of 5.6%, also far from the scenario forecast by the department headed by Nadia Calviño.
At World Economic Outlook, published this Tuesday, the IMF believes that the growth of the Euro Zone will be 3.9%. It estimates that the German economy will advance by 3.8%; the French, will do 3.5% and the Italian, another 3.8%. Spain will also grow above what the United States (4%), Japan (3.3%), the United Kingdom (4.7%) and Canada (4.1%) will do. Of the countries for which the report publishes data, only India (+9%) will grow more than Spain in terms of GDP.
It should be remembered that in the first year of the pandemic, the Spanish economy was the most affected. GDP contracted 10.8% in 2020, compared to the 4.6% drop in the Euro Zone of 6.4%. The German economy fell by 4.6% and the French and Italian by 8% and 8.9%, respectively. Although also important, the drop in the GDP of the United Kingdom was also less than that of Spain, specifically, 9.4%. Restrictions on social interaction activities and the weight of the services sector weighed heavily on Spanish GDP.
The IMF acknowledges that the economy has started the year “weaker than expected” and blames it on the omicron variant and the restrictions that different countries have established. In addition, escalating energy prices and bottlenecks in supply chains have pushed inflation higher than expected. In this sense, the institution warns that will remain at high levels in the short term and expects it to moderate as central bank stimuli are withdrawn and the supply crisis is resolved.
In line with the warnings from the Bank of Spain or the Independent Authority for Fiscal Responsibility (AIRef), the Washington-based institution insists that high inflation represents a “risk” if it is transferred to wages. “There is a risk that high living costs and tight labor markets will force workers to ask for (and companies to access) higher wages,” they summarize. “The resulting labor costs will in turn lead to higher prices, perpetuating an inflationary cycle that will need to be combated with an aggressive policy,” they justify.
Looking ahead to next year, the IMF estimates that Spanish GDP will grow by 3.8%, three tenths more than Funcas forecast. By then, the institution calculates that emerging economies will have achieved higher vaccination figures and that inflation will have moderated compared to this year and the previous one, after supply chains have returned to normal.