The growth of the Spanish economy maintains the positive inertia of recent years and is exceeding the expectations of all international organizations. In recent weeks, the IMF, the OECD and the European Commission have revised upwards their forecasts for the GDP (Gross Domestic Product) of our country, even surpassing the optimism of the coalition government, normally the actor most interested in maintaining an image of strength.

Of the updates made by the three institutions since May, the one announced this Thursday by the International Monetary Fund (IMF) stands out, which has raised its GDP growth projection by 0.5 points in 2024, from 1.9% to 2. 4%, and that left that of 2025 at 2.1%. The macroeconomic table that the Government sent to the European Commission at the end of April contemplates growth of 2% in 2024 and 1.9% next year.

“The rise in the IMF’s GDP forecast is unusually rapid, as it puts it above the consensus [del resto de instituciones y centros de análisis], when the usual thing is that it is lagging behind. I am also at 2.4%, although it is about to increase to 2.5%,” comments Ángel Talavera, chief economist for Europe at Oxford Economics.

The improvement in the estimate “is not only relevant because of the magnitude, but because the IMF usually goes ‘behind the curve’ when it comes to Spain. That is, their forecasts reach consensus several months after the others. It is unusual to see the organization breaking upwards,” agrees economist Daniel Fuentes.

The IMF’s new forecast for 2024 practically equals the 2.5% growth in 2023, but with different engines. Last year, the factors that most boosted the economy were “public consumption [es decir, la inversión/gasto de las Administraciones]”, the record creation of jobs (many of them in sectors with high added value and the vast majority less precarious) and the foreign sector (with the notable ‘boom’ in tourism but also in exports of other services).

On the other hand, in 2024, the IMF, the OECD and the European Commission agree to highlight the rebound in household consumption and the awakening of investment by companies in the upward revisions of their forecasts. The OECD forecasts 1.8% for 2024, after raising its projection three tenths in May. Meanwhile, the European Commission reaches 2.1%, after increasing its estimate by four tenths, also in May.

“My general assessment is satisfaction,” admitted this Thursday Carlos Body, Minister of Economy, Commerce and Business, in an almost urgent press call, to boast about the IMF review. Not in vain, with these latest numbers, Spain’s GDP growth will triple that of the eurozone as a whole.

The estimates “are well above our forecasts, those of the Government. Thus, the IMF joins a long list of organizations, both national and international, that have been repeatedly updating their forecasts for the Spanish economy upwards,” he added.

“Our country is consolidated as one of the main advanced economies in terms of growth for both 2024 and 2025,” he continued. Regarding the arguments for updating the IMF projections, Carlos Corpo stressed that “they point out as the main determinants of growth both the good performance of the labor market, based on the good result of the labor reform, and the dynamics of our exports. ”.

“And in the future [el organismo] signals the recovery of domestic demand, with private consumption that will be strengthened by the progressive recovery of purchasing power by households [gracias a la subida del SMI, de las pensiones, a que hay más gente trabajando y a los aumentos salariales en general]as well as an investment by companies that will be supported by the deployment of the Recovery Plan,” he summarized.

“The Spanish economy has demonstrated outstanding resilience in an uncertain global context and despite the tightening of financial conditions [por las subidas de los tipos de interés del BCE]”, says the IMF statement, published this Thursday.

This good news about activity in our country coincides precisely with the decision of the European Central Bank (ECB) to cut official interest rates. A drop in the ‘price’ of money from 4.5% – a maximum since 2008, at which it has remained since autumn – which, effectively, will provide relief for mortgaged families, for companies and for the economy in general.

Moderation of inflation

“The ECB cut marks a turning point, which is a good sign from two points of view: it responds to a positive assessment of inflation [el FMI espera que disminuya ”aún más, acercándose al objetivo del 2% del BCE antes de mediados de 2025“] and it represents a relief for households and companies,” reiterated the Minister of Economy, who calculates that “families mortgaged at a variable interest rate could achieve savings of close to 400 euros in 2024, on average.”

Asked if the Government is considering reviewing its macroeconomic framework, Carlos Corpus indicated that it is a “prudent” forecast framework, because “it has to be the basis of the 2025 General State Budgets,” and acknowledged that since it is surpassed by the estimates from international organizations, “makes us comfortable.”

The truth is that economic growth helps reduce the budget deficit (the imbalance between income and expenses, in relation to GDP) and indebtedness (public debt also in relation to GDP). Currently, the Government hopes to leave the deficit at 3%, as required by the EU, and continue reducing the debt.

Tax Reform

“In July, in the Situation Report on the Spanish economy [que se publica anualmente]”We will see if it is possible to update our forecasts,” explained the minister. In his statement, the IMF praises “the coalition government’s commitment to fiscal discipline, despite the difficult political environment.” [ahora que vuelven las reglas fiscales a la Unión Europea]”. And it warns that “sustained and growth-friendly fiscal consolidation will be necessary, integrated into an explicit medium-term fiscal plan, focused on reducing tax inefficiencies and expanding the tax base.”

On the other hand, the international organization emphasizes “the need to ensure that taxes on windfall profits on banks and energy companies, if made permanent [es el compromiso del Gobierno de coalición]are appropriately designed to minimize possible distortions.”

This Tuesday, at the press conference after the Council of Ministers, the first vice president and Minister of Finance, María Jesús Montero commented that “we are working with the European Commission to consider the milestone of the tax reform accomplished,” and assessing whether “ incorporate some element that they [el Ejecutivo comunitario] “It seems to you that it may have some interest.”

For example, the head of the Ministry of Finance has addressed that “the effects of the Ukraine crisis itself have not yet passed,” and has left open the possibility of extending the food reduction, valid until this month of June according to the latest anti-crisis decree.

The coalition government then has to convert the temporary levies on banks and energy companies into permanent taxes. Meanwhile, it has already created the tax on large fortunes, the tax on non-reusable plastic containers and this Tuesday it took the definitive step so that large companies pay tax on at least 15% of the profit, as agreed within the framework of the OECD.

Finally, the IMF makes two well-known recommendations. First, it highlights “the importance of adopting a balanced set of measures necessary to guarantee the sustainability of the pension system.” Second, remember “that increasing the supply of housing is key to improving affordability”, one of the main problems currently.


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