The boom in services and tourism makes Spain the country to which the IMF raises its growth forecast the most
Spain will be the industrialized country whose GDP will grow the most in 2024. That is the prediction of the International Monetary Fund (IMF), which in just three months has raised its growth estimate for Spain by one percentage point, which is also the largest increase in advanced economies, with an expansion of 2. 5% of GDP. The country that follows closest is the United States, with 1.8%.
The key to the rise is, once again, the great engine of the Spanish economy: tourism, to which on this occasion the services sector is added. That is the reason why the Fund raises growth by four tenths for Italy and one point for Spain. Both countries are the face of the eurozone coin; the cross is Germany, the economic leader of the EU, whose fall worsens this year.
As the Fund's chief economist, Pierre-Olivier Gourinchas, highlighted in the presentation of the report, “global demand has rotated” since the end of the confinements of the Covid-19 pandemic.. “Initially the economies reopened and there was strong demand for goods and now in a second phase we are seeing increased demand for services as people start to get out and travel,” he added.. The corollary is that “this demand for services has, logically, a strong impact in countries that are tourist destinations, such as Italy and Spain.”
Gourinchas stressed that the revision of Spain “is important, because it is not very common for there to be an improvement in growth and, at the same time, a reduction in inflation”, since he foresees an average CPI of 3.2% this year, 1.1 points below their previous estimate. Of course: Spain is not free of the slowdown expected for 2024, as the world economy normalizes, so, for next year, the IMF does not change its growth forecast, which remains at 2%.
In the international context, the Fund draws a pessimistic scenario for the world economy, although less than in April. The growth of global GDP is revised upwards by two tenths, up to 3% this year, and it does not touch it in 2024, when it expects that same figure to be repeated. But they are low magnitudes. Core inflation – which excludes the most volatile components, which are the prices of fresh food and energy – remains at high levels and, in fact, the IMF raises its forecast for 2024, which portends higher rates, less income available, perhaps, more financial instability. Geoeconomic tensions – the buzzword in the jargon of International Relations in 2023 – will continue, according to the institution, which seems to suggest that the Fund does not see an end to the Russian invasion of Ukraine or to the bad relations between the US and China. .
All this means that the post-Covid reactivation is being weaker than expected although, in return, the financial crisis that caused the collapse of several medium-sized US banks and the Swiss giant Crédit Suisse seems to have ended. However, inflation persists, and as interest rates rise, the fragility of the financial system could again be exposed.. China continues to show signs of weakness, with the problems of its real estate sector unresolved. In fact, the new forecasts do not include the bad Chinese GDP data for the second quarter of the year, which will have an impact on the world economy.
There are more risk factors. Debt restructuring for least-developed countries remains a problem, in part because China, which financed those economies, refuses to accept debt relief.. In general, emerging and developing countries suffer reductions in their forecast growth. This is the case of the Middle East and Latin America – partly due to the fall in the prices of raw materials – Central Asia and Sub-Saharan Africa, although there are exceptions to this trend, such as Brazil and Mexico.
All of those factors – inflation, the slowdown in China, and banking and debt crises – persist.. So despite the slight recovery in growth, the global economy continues to face the risk of slowing further.