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Spain will be the second fastest growing large industrialised economy this year and next year, according to the International Monetary Fund (IMF) in its biannual World Economic Outlook report, which was released in Washington this week.

 

Only the United States in 2024 and Canada in 2024 are forecast to grow more than Spain, they say. Of the major developed economies, Spain is also, along with the US, the only one to have seen its growth forecast for this year corrected upwards. In the case of the US, the increase is 0.6% and for Spain it is 0.4%.

 

In overall terms, the world economy continues to grow, but public deficits remain high and the two largest economies, China and the US, do not seem likely any time soon to reduce their public spending, with the result that global public debt is barely falling.

 

The IMF’s analysis of inflation is more optimistic, as price growth continues to moderate, with the exception of the US, where the report shows some concern. In the Euro area, annual inflation was down to 2.4% in March according to Eurostat.

 

While the situation for Spain is promising, the moderate rate of growth may lead to problems for employment in Europe down the line, including in Spain, as companies may have been increasing their workforces in anticipation of an economic expansion that fails to fully materialise.

 

Meanwhile, high interest rates may also exacerbate the problems of poorer countries in paying their debt, a silent crisis that has been worsening since the end of the Covid-19 pandemic.

 

Geopolitical uncertainty in Ukraine, Gaza, Israel, Taiwan and, as of Saturday, Iran are the most worrying elements at the IMF. These conflicts have already hit the global energy supply chain and energy markets, although officially the IMF does not comment on conflicts among its members.