The economy will be weighed down by inflation that will continue at 5% at the end of the year, although it continues to be the one that will grow the most in the eurozone, with Germany entering a recession
The International Monetary Fund (IMF) joins the list of organizations that are questioning the economic projections on which the Government has based its General Budgets (PGE) for 2023. The organization predicts in its latest report ‘World Economic Outlook’ (WEO , for its acronym in English), that the Spanish economy will grow only 1.2% next year, eight tenths below its estimates for July and two points less than in those of April, when the war in Ukraine had already one month active.
It is one of the most negative forecasts for Spain that several organizations have been giving last week. While the Government foresees an advance of 2.1%, the Bank of Spain considers that this will be 1.4% and the Fiscal Authority (Airef), 1.5%. Only BBVA Research forecasts less growth than the IMF: 1%. From the Executive they explain that the first quarter of 2023 will be more positive than that predicted by other organizations, since they trust that European funds will begin to have an effect on the economy from the beginning of the year, something that the Bank of Spain postpones until spring .
In a brief comment on Spain, the IMF considers that the good recovery after the pandemic in tourism and industrial production in the first half of this year has contributed to the projected growth for 2022 rising three tenths to 4.3%, in line with the rest of the organisms and the Government. Instead, he warns that “the growth of Spain will slow down drastically in 2023” with inflation as a background actor.
The CPI rate will remain very high next year. The Washington-based organization calculates that in 2022 inflation will end at 8.8%, an expectation that all organizations already share as inevitable after ten months at such high levels. But for 2023 they also expect inflation to continue at record levels, closing the year at 4.9%.
Germany enters recession
Despite these bad omens, the Spanish economy will continue to be one of the fastest growing in the entire eurozone. In fact, the average of the euro countries will experience a more pronounced slowdown than that of the United States, warns the IMF. Although this year it will advance by 3.1%, next year it will only do so by 0.5%, dragged down by the bad behavior of countries so powerful until now such as Germany (-0.3%) or Italy (-0.2%). ).
Both powers will enter a recession when they see their GDP fall below zero, a situation that has not occurred since the Second World War and that between the pandemic and the invasion of Ukraine they will live twice in just four years. In the case of Germany, the IMF considers that the consequences of the Russian gas supply cut-off will inevitably affect the country, for whom they calculated growth of 0.8% in July and now lead to recession (-0.3%).
From the Ministry of Economic Affairs they explain that despite the negative international context, the IMF has confirmed the “strong recovery of the Spanish economy”. Thus, in 2023 the national GDP will double the growth of the eurozone average and will be “well above” that of the other large euro economies. In addition, regarding inflation, “it is expected to have peaked in 2022” and that next year it will be below the average for the euro zone.
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