The IMF cuts its GDP forecast for Spain in 2022 by one point, but places it as the advanced economy that will grow the most | Economy

The war and inflation, which erodes the purchasing power of households, will cut growth sharply in 2022. Spanish GDP will rebound by 4.8% this year, one percentage point less than expected so far, according to figures presented this Tuesday by the International Monetary Fund (IMF), which warns —in a global key— of the economic setback caused by the Russian invasion of Ukraine.

Spain, which was one of the advanced economies that suffered the most from the covid-19 shock, will be the rich country that will grow the most this year: only two smaller nations, Ireland (+5.2%) and Israel (+5 %), will slightly exceed the Spanish figure, while Malta will equal 4.8%. For 2023, the multilateral organization forecasts an expansion of 3.3%, half a point less than forecast in January. With these figures in hand, however, the economy would not recover all that was lost in the fateful 2020 —in which the pandemic took almost 11% of activity ahead— until well into next year.

The IMF snip is far from unique. The downward revision of growth forecasts has become something recurrent since last February 24, when Vladimir Putin took —unilaterally and bypassing any international agreement— the determination to invade Ukraine, blowing up the energy and raw material markets. Although the rise in the price of fossil fuels, food and metals came from behind, the war conflict has been the last straw for Western Europe, a region highly exposed to gas and oil prices and whose citizens see how their bills rise month after month and They think twice before consuming.

Since then, without putting specific figures, the Organization for Economic Cooperation and Development (OECD) has warned twice of the slowdown in the Old Continent. And the governments – this Monday was the turn of the Spanish – have warned that the paradigm shift will force them to revise downwards their almost always optimistic macroeconomic charts.

In the purely national sphere, weeks before the Executive of Pedro Sánchez has admitted that growth will be lower than expected, both the Bank of Spain and the analysis center of the old savings banks (Funcas) and the study service of BBVA had lowered their forecasts to 4.5%, 4.2% and 4.1%, respectively. Figures, all of them, slightly more pessimistic than those of the IMF, but which point —like the Fund— to the fact that the Spanish economy will not return to the pre-pandemic path until well into 2023, somewhat later than the rest of the large neighboring countries.

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Despite seeing its growth cut by more than one percentage point in this Tuesday’s review, the eurozone as a whole will return to the pre-pandemic GDP level in the second half of the current year, several months before Spain, Italy and even the United States. Germany.

The IMF also offers relevant data on the sources of growth of the Spanish economy both in 2022 and in 2023. In both exercises, household consumption —reduced by the bite of prices on the family pocket— and investment will be the two main vectors of expansion, followed at a great distance by exports and public spending. This last game, the only one that withstood the pull in the toughest moments of the crisis, thus takes a discreet third place as the private and foreign sectors take over.

After the good response of employment in 2021 and in the first months of 2022, the IMF expects the rebound to lose momentum in the coming months. Thus, the unemployment rate should average 13.4% this year, levels very similar to those reflected by the National Institute of Statistics (INE) at the end of 2021, to drop slightly – to 13.1% – in 2023.

Inflation, below the ECB’s target already in 2023

Even with energy and raw materials at record levels, the current account balance —the indicator that measures income and payments abroad for the exchange of goods, services, income and transfers, and which became positive in 2013 after three consecutive decades of deficits—will continue to post green numbers both this year and next. It will do so, yes, with much more modest figures than in previous years: 4,300 million dollars (almost 4,000 million euros) in 2022 and 6,600 in 2023, compared to the 29,300 million registered in 2019 or the 10,600 in 2020, in the harshest of the health and economic crisis.

Although the entity led by Kristalina Georgieva does not make an explicit mention of tourism, the resistance exhibited by both the economic recovery and the current account surplus has to do largely with the gradual return of international traveler flows in a country in the that this activity contributed more than 12% of economic activity in the pre-covid era.

The Fund also introduces some interesting nuances in its projection unveiled this Tuesday. The clearest, in the field of inflation: after the explosion in prices this year (+5.3%), the technicians of the Washington-based agency predict that the CPI will fall sharply to 1.3% in 2023 , when it will be clearly below the objective of the European Central Bank (2%) in the next five years. The average price increase rate will thus be identical to that of the eurozone in 2022, despite the fact that the Spanish index tends to overestimate the increase in electricity prices: it only takes into account the evolution of regulated market contracts, that have suffered the greatest initial blow.

If this inflationary scenario is fulfilled —of skyrocketing prices, both in Spain and in the eurozone, but only temporarily: in the eurozone, the increase in prices next year would only be three tenths above the goal of the issuing institute— Christine Lagarde’s ECB would not have as many incentives to raise interest rates. A measure that has already been taken by both the US Federal Reserve and the Bank of England, among others, but which in Europe would not only slow down growth even more, but would also feed the risk of north-south fragmentation and add additional weight to the backpack. of those —families, companies and states— who have mortgages or other outstanding debts. Spain, among them.