new impetus for Spanish economy. The International Monetary Fund (IMF) has raised a point, up to 2.5%the increase foreseen for the gross domestic product (GDP) in the present exercise, in the update of its ‘World economy perspectives’, released this Tuesday. For the next financial year, it maintains an estimate of 2%, as is the calculation that was released last April.
The new IMF forecast, with an increase compared to April that exceeds that of any other major economy, exceeds the improvement already estimated by the Bank of Spainby placing the rise in GDP this year at 2.3%, from the 1.6% that it had calculated last March, and it is even higher than what was anticipated by the own government in the update of the stability program sent last May to Brussels, which was 2.1%. The European Commission, for its part, calculated that the increase in GDP this year will be 1.9% in 2023 and 2% in 2024, which also meant an improvement compared to its previous estimates.
According to the IMF, the data have been revised upwards due to “the greater strength of the services and tourismwhich also benefits Italy, with an improvement of four tenths with respect to the previous estimate. This trend has been consolidated in recent months through upward revisions by different organizations and study services. One of the aspects that stands out the most is the evolution of employment. GDP already gained strength in the first quarter, with an advance of 0.6% compared to the last of 2022, one tenth more than what the National Statistics Institute (INE) had previously forecast (0.5%).
fall in germany
Instead, for Germanythe largest economy in the euro zone, the IMF forecasts a 0.3% drop in GDP by “weak manufacturing output and economic contraction in the first quarter of 2023“. All this has forced a cut of two tenths with respect to the previous estimate. It is the only one of the large economies in the euro area that will register a decline, according to these forecasts which, in any case, point to a recovery of 1.3% next year. Consequently, the GDP of the euro zone will advance 0.9% this year; and that of 2024 will gain strength with an advance of 1.5%in both cases one tenth more than what was calculated in April.
The international financial organization forecasts a slowdown in growth worldwide, going from an estimated 3.5% for 2022 to 3.0% (two tenths more than forecast in April) in 2023 and 2024 (without variation compared to April). Despite the fact that the estimate for the current year is better compared to April, “remains weak from a historical perspective”, says the IMF report. In the period 2023-2024 it is well below the historical average from 2000 to 2019, which was 3.8%. The advanced economies 1.5% will slow down this year, two tenths more than estimated in April, from 2.7% in 2022; and 1.4% the next year (without variations). USA it will advance 1.8% this year, two tenths more than initially expected; but it will slow down to 1% in 2024, one tenth less than estimated in April.
The interest rate hike cycle initiated for the first time by the US Federal Reserve, already located in a range of 5% to 5.25% and which could increase this Wednesday; and then by the European Central Bank (ECB), which in one year has gone from 0% to 4% and this Thursday could increase them again “continues to weigh down economic activity”.
This evolution “It is gradually filtering into the financial systemand banks in advanced economies the rules for granting credit have been considerably tightenedwhich decreases its supply”. Despite all this, world economic activity “has shown itself to be more resilient in the first quarter of 2023, and the services sector was the one that contributed the most to that resilience”.
It is planned that the general level of world inflation falls from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024 and that the Underlying inflation (which is the most structural by excluding fresh food and energy prices,”decrease more gradually”although the forecasts for inflation in 2024 have been revised upwards.
In the opinion of the IMF analysts, the recent agreement to raise the US debt ceiling and “the firm measures adopted at the beginning of this year by the authorities to contain banking turmoil in the US and Swiss reduced the immediate risks of disruption in the financial sector.” If anything, “the global growth outlook is tilted to the downside” and inflation “could remain high and even rise if further shocks, such as an escalation of the war in Ukraine and extreme weather events, trigger more restrictive monetary policy.”
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In fact, the fund warns that “the turbulence in the financial sector could return as markets adjust to the new tightening of policy by central banks” At the same time they warn that “China’s recovery could slow down, partly due to unresolved real estate problems, which carry negative cross-border contagion effects”.
Regarding world trade, the forecast is that it will drop from a rise of 5.2% last year to 2% in the current year to recover in 2024 with 3.7%, although “a level much lower than the average of 4.9% registered in the period 2000-2019.