The International Monetary Fund (IMF) has raised its economic growth forecast for Spain in 2024 by half a point, to 2.9%, in line with the latest analysis centers that have revised their estimates and a couple of tenths above the table macroeconomic of the Government.
For 2025, the IMF leaves its GDP (Gross Domestic Product) projection at 2.1%. According to the set of forecasts of the organization led by Kristalina Georgieva, our country will lead the main economies of the eurozone, where Germany’s weakness stands out. Its GDP will remain stagnant in 2024, after contracting three tenths in 2023.
Spain’s exceptional nature is largely explained by the dynamism of family consumption, which is supported by the moderation of inflation, the reductions in interest rates of the European Central Bank (ECB), and the historic creation of jobs. of work and in the lower precariousness of contracts, both due to the labor reform and the increase in the Minimum Interprofessional Wage (SMI).
Regarding price increases, the IMF estimates that inflation will close the year at 1.9% in Spain and that it will remain at that level on average in 2025.
Meanwhile, despite the increase in employment, our country will continue to be the economy with the highest unemployment rate among the large economies in the eurozone. Unemployment will reduce by one point, to 11.2% in 2025, from 12.2% from 2023. In the eurozone as a whole it will remain at 6.4%, according to the IMF.
Spain’s growth stands out from the eurozone
Taking as a reference the Funcas data, published just before the update of the IMF projections and which glimpses a similar horizon, Spain’s GDP level will exceed the pre-pandemic level by 6.7 percentage points at the end of 2024, that of the end of 2019, and in 2025 at 8.9 integers. Meanwhile, the GDP level of the eurozone as a whole will rise to 4.2 and 5.7 points, respectively.
The headlines and political accusations about our country being at the tail end of the recovery have aged very poorly. A catastrophic story that could only prosper due to the INE’s error in the calculation of the National Accounts (as explained in this information), and that after three historical corrections has still not been completely corrected.
In this scenario, the reactivation of the fiscal rules of the European Union (EU) is a first brake on the economic activity of our country. The Government has already sent its Fiscal and Structural Plan for the next seven years to the European Commission, in which it promises discipline that entails limiting the annual increase in “net primary spending” to 3% on average between 2025 and 2031. Ignoring the technical complexity and the lack of details of the calculation of this new ratio that will be monitored from Brussels, what means is that “public consumption” will no longer be a decisive driver of GDP growth, as it has been from 2020 until this year .
Another engine of our economy is tourism, which will also be one of the factors that will deepen the slowdown in 2025, compared to 2024. Tourism does not have a limit that is imposed, but rather it is a ‘ceiling’, which if has not already been reached, it is very close, which has been reflected in its impact on the large capitals and the main destinations, both due to its pressure on housing prices and the general deterioration of living conditions in those places. .
Other risks for Spain are precisely the difficult access to housing, the weakness of Germany and the eurozone and, on the other hand, an unusual accumulation of family savings.
“Current savings levels have only been observed in contexts of high uncertainty. It is the first time that these levels have been seen in an environment of constant job creation. Although the reduction in interest rates will allow greater growth in consumption, there is evidence that the benefits of the recovery are being concentrated in groups with a lower marginal propensity to consume. Furthermore, the increase in employment is disproportionately concentrated in immigrants,” explains the BBVA Research team of experts.
“On the positive side, the household savings rate could fall more than expected, generating a significant boost to household consumption. Furthermore, it is worth highlighting that both households and companies have improved their financial situation in aggregate terms,” say Funcas.
The great positive surprise in terms of the future of our foreign sector are the exports of other types of services (consulting, related to technology, communication…). Finally, all experts point out that it is key for business investment to wake up, in which the European funds of the Recovery Plan play a key role.
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