Spain's deflation risk is 'among the highest on Earth', says FMI
Spain's deflation risk is 'among the highest on Earth', says FMI
SPAIN is one of the world's highest-risk countries for deflation – and this phenomenon in the Eurozone as a whole is one of the main threats to the globe's economic health, claims the International Monetary Fund (FMI).
Head of World Economic Studies Thomas Helbling says Spain needs an 'in-house devaluation', so that prices in general fall 'in comparison with its fellow member States'.
“Let's not forget that Spain suffered what was probably the worst property market fall in Europe, and it takes a long while to recover from this,” Helbling announced this week.
Despite the European Commission having recently criticised president Mariano Rajoy's fiscal reforms for 'doing nothing to create jobs' and 'seriously aggravating poverty', Helbling stated: “The most important thing is for Spain to have the strength to carry on with its fiscal reforms.”
The FMI's predictions for Spain's growth have improved slightly, forecasting that unemployment will fall to 25.5 per cent by the end of this year rather than the current 26.6 per cent, and that in 2015, jobseeker numbers will reduce to 24.9 per cent.
Prices on average will rise by 0.3 per cent this year, and 0.8 per cent next year, Helbling predicts.
Growth forecasts in Spain are among the weakest for the whole of the Eurozone, at 0.9 per cent of the Gross Domestic Product (GDP) for 2014 and one per cent for 2015, even though this is a slight increase on previous expectations.
Spain's government's own forecasts are for growth of 0.7 per cent this year and 1.2 per cent next.
