WASHINGTON, Oct. 22 (.) – The International Monetary Fund (IMF) has worsened Spain’s budget deficit forecast for this year, with the 2024 budget deficit two-tenths lower than the institution predicted last April. It was estimated that it would end at a high 3.3%.
The IMF and World Bank released their latest World Economic Update (WEO report) on Tuesday, updating their databases with debt and deficit projections, as part of their annual meetings this week.
The IMF maintained its forecast for Spain’s 2025 deficit at 3%, the same as its previous forecast in April. Similarly, the gap in public accounting has improved by two-tenths compared to 2026, when it will be 3%.
The agency also lowered Spain’s debt outlook for this year to 102.3% of GDP from 106.3% calculated in April.
The government also significantly lowered its 2025 debt outlook to 100.7% of GDP from the previously calculated 104.9%. In 2026, this number will fall to 99.6% of GDP.
On growth, the IMF has raised Spain’s 2024 growth forecast by five tenths to 2.9%, a figure that stands out in the depressed euro zone, where growth is only 0.8% this year.
The data is higher than the Bank of Spain’s forecast, which predicts gross domestic product (GDP) to grow by 2.8%, and the government’s own forecast, which predicts economic growth will be 2.7%.
Despite Spain’s positive economic outlook, the IMF said Pedro Sánchez’s government “recognizes that it is important for Spain and many other economies in the region to get back on track in the medium term.” It is necessary to do so,” he said. “We will gradually restore our finances to replenish our mattress supply,” he said, exhausted by Europe’s energy crisis caused by the pandemic and the war in Ukraine.
This was estimated by Petya Koeva Brooks, Deputy Director of the IMF’s Research Department, in an interview with EFE. “I think some of that is already happening, but it will be important to keep it that way over time,” he said.
He said another challenge for Spain is that despite having made “a lot of progress”, it faces high unemployment as it is “one of the countries with the highest structural unemployment in Europe”. He added that there is.
“Here, we believe that in the implementation of labor reforms in 2023, it will be very important to use active labor market policies, even at the local level, and to ensure that they are properly implemented. ” he said.
