The IMF predicts Spain contraction twice that predicted the Zapatero government
| Date: April 22, 2009 | Source: Reuters |
| Category: Economy | |
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According to estimates released today by the IMF reduced growth forecasts of all major countries by financial instability. According to this, Spain's GDP will fall by 3 percent this year and 0.7 percent next. The International Monetary Fund (IMF) predicts higher unemployment in Spain and a longer recession than predicted in January, given the collapse of production in Europe and the U.S. during the past six months.
In the Spanish case, the external wind meets the domestic downturn in the housing sector, which must continue to "significantly" still, as predicted by the Fund. With the correctness of the figures, so far estimated a decline of 1.9%, the institution about the opinion of the Bank of Spain, who predicted an economic contraction of 3% this year and 1% in 2010 .
Far away are the latest estimates of the executive, developed in January, which spoke of a contraction of 1.6% this year and positive growth of 1.2% for the next. The Fund also aligns with the central bank with respect to unemployment, joblessness portend for 17.7% of the workforce in 2009 and 19.3% in 2010.
The thud of economic activity away with any hint of inflation this year, as prices will remain unchanged, according to the Fund. In fact, the annual rate of inflation recorded in March the first fall since the collected information, to download a tenth. That has raised the threat of deflation, which slows growth by encouraging consumers to delay purchases, waiting for prices to fall further, economists said. For 2010, the Fund believes that prices will rise 0.9 percent in Spain.
Germany, Italy and France also not escape the crisis
At European level, "the risk of sustained deflation has increased, although still low," the IMF warning, recommending that the European Central Bank (ECB) to further reduce interest rates to stimulate spending. Weakened domestic demand for the end of the housing bubble, Spain can not trust much to export to its main trading partners will take the hole.
The Fund reduced forecasts for growth in Europe, in some cases very dramatically. Germany will contract by 5.6% this year, France 3% and Italy 4.4%. Overall, the euro area GDP will fall by 4.2% this year and 0.4% in 2010. Given this scale, Spain does not seem too bad off, but started from a level of activity much stronger than its neighbors. In 2007 the economy expanded by 3.7%, which means that within two years of growth will decline by almost 7 percentage points, if they meet the prospects of the Fund.
The Fund also notes the increase "dramatic" risk premium of the Spanish Treasury bonds, given the lack of investor for the obligations contracted by the Government to respond to the crisis. The higher cost of public debt "limits future tax options" in Spain, alert the body. In its report, the IMF does not spare criticism of Europe, which was accused of resting on its laurels while the crisis was brewing. "Macroeconomic policies responded slowly" and the instinctive reaction of governments was to take measures alone "that undermined rather than strengthened the interventions of other countries," he says.
The Fund seeks to Europe to establish mutual support mechanisms to aid members of the Union and "ideally" also Eastern European countries which stick out into the abyss of bankruptcy. "This is essential to avoid a disorderly adjustment in one country can sink to others," he warns. A particular danger is a departure in rout of Western banks in Eastern Europe, making it impossible to pay the debt to some of the governments of the area and its western neighbors even more vulnerable, according to the IMF.
