The International Monetary Fund (IMF) has raised the growth forecasts for the Spanish economy, from 1.5 to 1.9% for 2024 and has predicted an increase of 2.1% in 2025.
“The Spanish economy is very resilient and domestic demand is showing solid growth,” Romain Duval, head of mission of this financial organization that depends on the United Nations, indicated this morning at a press conference.
According to the organization, the growth of the Spanish economy will come from an increase in consumption after the gradual normalization of the savings rate and a moderation in interest rates, and also from a rebound in private investment, which can benefit from the Next Generation funds and the relaxation of financial conditions.
The IMF has also predicted a moderation in the price rise. “Inflation will continue to fall throughout 2024-25 in a context of reduced energy prices and containment of wage pressures. The withdrawal of support measures to alleviate the effects of the energy and food crisis will produce specific increases prices, but subsequently inflation should resume its downward trend, approaching the ECB’s goal in mid-2025,” the organization says in a statement.
The IMF has warned of the risks of Spanish political fragmentation in stopping the approval of structural reforms that the country needs in terms of pensions, for example, and has also warned of the risks that this same fragmentation poses for the consolidation of accounts. prosecutors. Duval has argued that this factor could undermine business confidence, investment and growth.
The organization has emphasized the problems of access to housing that plague the country, both property and rental. The IMF has ordered the Government of Spain to approve policies that stimulate the supply of housing, rather than supporting demand in a “distortive manner.” In this sense, Duval has criticized Catalonia’s decision to apply the Spanish housing law that limits rental prices and has rushed to repeal it as soon as possible. “Previous experiences in other countries suggest that rent caps reduce the supply of housing and limit access to marginalized groups,” Duval said.
Regarding the Spanish public debt, the IMF has considered that it remains too high and has recommended fiscal efforts to reduce it. “With a level above 107% of GDP, debt continues to be high and fiscal space is limited. A multi-year program is necessary that reduces the annual fiscal adjustment by 0.6%,” said Duval.
Taking into account the country’s economic growth, the IMF has recommended strengthening the efficiency of the tax system and expanding the tax base. He has also referred to the consolidation of specific taxes on the extraordinary profits of banking and energy companies, although he has advocated reforming their current configuration. “If the authorities decide to make these taxes permanent, their bases should be adjusted based on a clearer definition of extraordinary profits to minimize their distorting effects,” he concluded.
