IMF Raises Spanish Growth Forecast to 2.9% for 2024 Amid Eurozone Weakness
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Loading... - Lotta Koskinen
- 24 Oct 2024
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The International Monetary Fund (IMF) has revised its growth forecast for Spain, projecting a GDP increase of 2.9% for 2024. This marks a significant improvement compared to the broader Eurozone, which is expected to grow by only 0.8% next year. The IMF's latest forecasts were presented at the start of its annual meeting in Washington, alongside the World Bank.
The IMF describes the global economy as "resilient," with "stable but by no means spectacular" growth. While the United States is projected to grow by 2.8% and China by 4.5%, Europe, particularly Germany, is seen as a weak spot. The German economy is forecasted to face challenges, with indicators of economic activity returning to levels seen in 2020. Following a 0.3% decline in GDP in 2023, Germany is expected to experience zero growth in 2024.
In stark contrast to the stagnation in other European countries, Spain's economy is thriving, buoyed by a robust real estate and tourism sector. The IMF has increased its growth forecast for Spain by a full percentage point since its last meeting in April, highlighting the country's ability to weather the global manufacturing crisis that has adversely affected many of its neighbors.
Spain is characterized as a "Goldilocks economy," striking a balance that is neither too hot nor too cold. Inflation is expected to decrease from 2.8% this year to 1.9%, and the country boasts a current account surplus of 3%, providing a buffer against potential financial turbulence.
Despite Spain's positive outlook, the interconnected nature of the Eurozone means that a slowdown in Spain could have ripple effects, potentially subtracting nearly one percentage point from growth in 2025. The IMF warns that persistent weaknesses in the manufacturing sector are a burden for countries like Germany and Italy, which could further impact the overall economic landscape in Europe.
Spain's economic forecast stands out amid a backdrop of Eurozone stagnation, with the IMF's projection of 2.9% growth for 2024 reflecting the country's resilience and adaptability. However, as the Eurozone remains closely integrated, Spain must navigate potential challenges that could arise from broader regional economic trends.
