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The IMF raises Spain's growth to 2.8% for 2018 but alerts its imbalances

The fund gives Spain the largest upward revision among major advanced economies but warns of the high weight of public debt and the duality of the labour market

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The IMF raises Spain's growth to 2.8% for 2018 but alerts its imbalances

The International Monetary Fund raises this year's growth forecast for Spain by four tenths, from 2.4% that it had calculated last January to 2.8% that it now estimates. The review places Hispaniola among most dynamic advanced economies on world stage — with a higher GDP forecast than Germany or France — after a few months of uncertainty over Catalan political crisis, which has not vanished in Horizon, but it has stopped shaking activity in short term.

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The four-tenths review achieved by Spain is largest that IMF gives to a large advanced economy in its April forecasts (to Germany, France, Italy or United States it improves two tenths and to United Kingdom, one). However, despite best perspective, IMF is warning of various imbalances facing Spain: The burden of public debt, brake on foreign investment in it, and endemic problem of temporality in employment.

The new economic forecasts were released this Tuesday at start of IMF spring days, which has long since not had Spain as Lantern red, but as one of most vibrant economies in Europe. The But emerge when, instead of putting focus on review of last three months, we observe trends of future: growth is slowing in a very notable way, moving from an expansion of 3.1% in 2017, to one of 2.8% in 2018 , up to 2.2% at 2019. And this slowdown will come when huge unemployment bag has not been reduced enough — unemployment rate exceeds 16%, double that in average of euro, public debt is still in 98, 2% of gross domestic product (GDP) and prices of house begin to evoke Terrible memories of credit bubble.

Some of vulnerabilities in Spain are explicitly included in this IMF spring report. The fund warns of high indebtedness of public administrations, a burden which, combined with poor demographic forecasts, necessitates a reduction in ballast. This problem, which also significantly affects Italy, is combined in both countries with anor worrying trend, lower weight of international investment in se liabilities, which, according to report, may fall to 20 percentage points in relation To GDP.

Click on FotoEl labor market, under magnifying glass

Although labor market remains main cloud of Spanish economy, regardless of cycle. The fund's growth forecasts are more generous than those of Spanish Government (its prediction of last October was in advance of 2018 in 2.3%), that of European Commission (2.6%, calculated in February) or average of consensus elaborated by foundation of Economic analysis Funcas, of 2.7%. However, Washington-based agency takes advantage of report to insist on duality of labour market in Spain, which considers excessive protection of fixed employment in relation to unprotected temporary employment.

Or agencies, such as European Commission or Bank of Spain, have also warned of little recovery that salaries have experienced during se post-crisis years. Brussels has stressed that even in those sectors where productivity has improved re has been an equivalent joy in salaries.

The fund does not refer to this matter. A few weeks ago he pointed to or problems. Fewer people are born and migratory flow has nothing to do with that previous to Great Recession, so group of Spaniards in age and ability to work will diminish ostensibly if script is not altered. According to some calculations of fund, based on demographic forecasts of United Nations, rate of labour participation ( equivalent of what in Spain is called activity rate) will fall to 50% in 2050, compared to 58% with which it ended last year.


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