Spanish recession to hit harder than expected with bigger GDP contraction, says IMF

The IMF predicts that GDP in Spain will contract this year by 1.7 percent

Report commends Rajoy government for the measures so far taken

In its latest forecast on the Spanish economy, the International Monetary Fund on Friday predicted that Spain will suffer a much tougher recession than previously expected. The Washington-based lender concluded in its latest survey that the “economic outlook remains very difficult and vulnerable to significant downside risks.”

Among the factors for the negative forecast are “fiscal retrenchment,” high unemployment, ongoing deleveraging in the private sector, and heightened market tensions.

The IMF predicts that GDP in Spain will contract this year by 1.7 percent, down 0.2 percentage points from its previous predictions about two weeks ago. Forecast figures for domestic demand showed a big drop to -4.1 percent — its biggest fall since 2009 — from -1.7 percent in 2011. By the end of the year, the IMF believes that unemployment will close at 24.9 percent — about 0.3 percentage points higher than second-quarter figures released Friday.

IMF directors commended the Rajoy government for the measures that he has so far taken, saying that they are improving the imbalances, especially regarding the deficit, inflation and unit labor costs. They also welcomed Brussels’ move to help recapitalize Spanish banks, which may need up to 100 billion euros to offset their bad housing loans, and encouraged the EU to allow direct recapitalization through the European Stability Mechanism, because it “would help break the adverse feedback loops between the sovereign and banks, and have positive spillover effects for the wider euro area.”

Para poder comentar debes estar registrado en Eskup y haber iniciado sesión

Darse de alta ¿Por qué darse de alta?

Otras noticias

LATIN AMERICA

Rousseff aims straight for Silva in second TV debate

Brazilian president targets new Socialist candidate in bid to recover lost ground ahead of October 5 elections

On the trail of Venezuela’s food smugglers

EL PAÍS takes a trip with a ‘bachaquero,’ who sells subsidized goods in Colombia at market prices

United States punishes Mexican sugar producers

Sonia Corona Mexico City

Government accusing Mexico of unfairly subsidizing production of sweeteners

Mexico tries to stem flow of migrants to the United States

Verónica Calderón Mexico City

Civic organizations say new measures make crossing even more treacherous

Lo más visto en...

» Top 50

Webs de PRISA

cerrar ventana