FMI forecasts greater economic growth for Spain

A MORE optimistic outlook for Spain's growth is predicted for this and next year by the International Monetary Fund (FMI) now that it considers the Catalunya political crisis to be over, in terms of its possible effects on the economy.

The global organisation led by Christine Lagarde (pictured) forecasts the national economy will grow by 2.8% over this year – up from its previous predictions of 2.4% - and 2.2% next year, an increase from the former expectations of 2.1%.

This means Spain will continue to be the fastest-growing economy in the Eurozone, which is also expected to achieve healthy growth this year.

For the common currency area, the FMI expects to see growth of 2.4% this year, higher than its forecast in January of 2.2%, and of 2% in 2019.

Despite Spain's growth being the greatest in the Eurozone, the FMI's Global Economic Perspectives report warns that the country may have peaked last year and may begin to slow down progressively.

“In Spain, growth is expected to slow from the 3.1% seen in 2017 to 2.8% in 2018 and 2.2% in 2019, owith economic activity slowing down, albeit less so than calculations at the beginning of 2018 appeared to show,” the report says.

The FMI's forecasts are slightly more optimistic than those of Spain's government, which expects growth of 2.7% this year.

Whilst growth is likely to be healthy, the FMI warns that unemployment in Spain continues to be the second-highest in the Eurozone.

Mme Lagarde's team predicts jobless figures will continue to fall, dropping to 15.5% over 2018 and to 14.8% in 2019, compared with the 17.2% at the close of 2017.

But the Eurozone average for 2018 is forecast at 8.4%, around half of Spain's unemployment rate, which is only beaten by Greece's predicted 19.8% by the end of this year.

The FMI urges Spain to reduce the number of temporary job contracts given as opposed to permanent positions, streamline workers' rights and protections – currently different for temporary and permanent employees – and to 'improve training and education policies' to cut unemployment among young adults.

Contrasting with Spain and the Eurozone, the FMI puts the UK's growth at just 1.6% for this year and 1.5% for 2019, forecasting a continued slowdown as a result of Brexit.