© Reuters. Clouds fly over buildings in the business district in Madrid, Spain June 4, 2018. REUTERS/Sergio Perez
MADRID (Reuters) – The International Monetary Fund expects economic growth in Spain to slow in 2023 on higher prices and faltering demand before recovering back to pre-pandemic levels by 2024, the fund said Wednesday in its country report.
Growth is expected to be weak in the coming quarters reflecting a slump in consumer confidence due to the cost of living crisis and weak demand, the IMF said in its report. It said activity will accelerate towards year-end, supported by European Union recovery fund spending and improved supply.
“We do not forecast a technical recession, but growth will be close to zero in the last quarter of this year and the first quarter of 2023,” said Dora Iakova, head of the IMF mission to Spain.
Although the IMF has warned of many downside risks, especially from the impact of energy prices, the IMF expects gross domestic product to grow 4.6% in 2022, up from The previous forecast was 4.3% in October and slows down to 1.2% in 2023, higher than expected. average for the euro area countries.
This improvement is due to a robust labor market and particularly strong activity in the tourism and other services sectors.
The IMF added in the report that the country’s core and core inflation are likely to remain above the European Central Bank’s 2% target through 2024, while the country’s industrial output The country is expected to reach pre-pandemic levels in early 2024.
Core inflation and core inflation will converge in 2023 at around 4.5%, Iakova said.
While the report welcomes the swift implementation of government support to mitigate the impact of price increases, it is regrettable that these measures were not targeted and have resulted in market distortions.
“Most of the financial support is for measures that do not target and distort price signals, such as electricity tax cuts and fuel price cuts. The latter are costly,” the IMF said. financially, with disproportionate cumulative benefits for higher income households. report.