The International Monetary Fund (IMF) predicts that the Spanish economy grow 2.3% this year, two tenths more than what was calculated last October. What is striking about this improvement is that it coexists with more pessimistic calculations for the rest of the large European economies and for the Eurozone as a whole – the reduction that the organization applies to the projections of Germany, the locomotive of the region, is considerable – in a context of strong uncertainty about trade policy, coinciding with the arrival of Donald Trump to the White House next Monday, January 20.
Compared to this increase of two tenths in the Spanish case, the Fund cuts the GDP forecast for Germany by half a point to 0.3%. The euro’s largest economy will remain stagnant, having contracted by 0.2% last year. Another significant reduction is the one that affects France, mired in a deep political and budgetary crisis, for which the IMF reduces its previous calculation by three tenths to 0.8%. In the case of Italy, the downward revision is somewhat more modest – just one tenth – to 0.7%.
The Washington-based organization explains that its calculations incorporate the recent evolution of the markets and the impact of the greater uncertainty in trade policy, “which is assumed to be temporary and whose effects dissipate after approximately a year, but they refrain from making assumptions about the possible policy changes that are currently being debated in public opinion,” he concludes.
In the euro area, growth will be more gradual than expected in October, given that geopolitical tensions continue to weigh on the environment. A weaker boost to activity at the end of 2024, especially in the manufacturing sector, and greater political uncertainty explain a downward revision of two tenths to 1% this year. In 2026, growth will increase to 1.4%, supported by stronger domestic demand, as financial conditions ease, confidence improves and uncertainty slightly decreases.
In the Spanish case, the organization led by Kristalina Georgieva The expected advance of the economy for 2026 remains at 1.8%. Spain will put on the brakes, while the rest of the partners will step on the accelerator, although to still grow at a modest pace. Germany and France will do so at 1.1% and Italy at 0.9%, practically half of what the United States will do and a quarter of what China will do.
The pending adjustment path
The Fund insists that countries must focus on fiscal policy to put public debt on a sustainable path and restore the necessary space to provide more agile responses to future crises. This is one of the large pending accounts that the national economy has, even more so with the entry into force of the new fiscal rules this year. Spain accumulates more public debt than ever, but the rise in GDP moderated the ratio to 104.4% until September.
Although this path of consolidation is essential, it has to be carefully calibrated based on the conditions that each economy faces. “It must be considerable but gradual so as not to harm economic activityclearly communicated to avoid disturbances in debt markets, and credible to achieve lasting results,” explains the organization.
Its economists also remind that adopting a pro-growth approach and mitigate adverse effects on vulnerable population could help preserve the economy’s potential, while governments maintain public support. The majority of European economies, such as Spain, are in the process of withdrawing the stimuli that were approved to face the consequences of the war in Ukraine and the energy and inflation crises.
General forecast improvement
The upward revision of the forecasts by the IMF coincides with that carried out by other organizations and research services. The Independent Authority for Fiscal Responsibility (AIReF) is somewhat more optimistic, having raised its previous calculation for this year by two tenths to 2.5%. Precisely, the Minister of Economy, Trade and Business, Carlos Body, assured on Thursday that the GDP would grow this year at that same level “or even more” within the framework of his speech at the Spain Investors Day.
And to the forecast of the auditor and that of the Government is added that of the Bank of Spain, which also places the progress in activity at 2.5% this year. The increase in families’ disposable income and the rise in consumption have led Funcas, the savings bank Foundation, to improve its calculation to 2.4%.
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