SPAIN will be one of a small number of countries that will escape a 'technical recession' by next year, according to the International Monetary Fund (FMI).
During 2023, the country will experience 'strong growth', with its Gross Domestic Product (GDP) expected to rise by 1.2%, according to FMI director for Europe, Alfred Kammer.
The International Monetary Fund (FMI) head office (photo: Reuters)
Even though this is a far more cautious estimate than the previous – which was 2% - the forecast figures still mean Spain will be the fastest-growing economy in the Eurozone next year, Kammer reveals.
“Spain is one of the countries for which we are not expecting a recession next year – a time when it will experience strong growth,” Kammer explained.
Even then, in the same way as many of its neighbouring countries, Spain will continue to be held back by 'weakened demand' and 'falling consumer confidence' which started with the pandemic and has continued with the more recent price-led inflation, fuel and supply crisis and the conflict in Ukraine.
But sub-director for the FMI's Department of Research, Petya Koeva Brooks, admitted that the 1.2% forecast for Spain's growth was in fact a little over-cautious – it had been calculated before GDP second-quarter results were published.
For the months of April to June inclusive, says Ms Koeva Brooks, Spain 'exceeded expectations' by showing 1.5% GDP growth.
“If we were making these forecasts for 2023 now, in light of this new information, we would probably be releasing even higher figures,” she says.
Kammer's verdict is a little more prudent, however: He warns that Spain will not fully recover its economic activity affected by the pandemic until early 2024.
Although anecdotal evidence, and figures by individual sectors locally and regionally, seem to show Spain is almost back to business volumes of 2019 or even exceeding these, the economy will take time to catch up.
The country took one of the biggest hits of all developed nations in 2020, given its high exposure to industries that involve 'people presence' – such as tourism and hospitality – which were almost entirely out of action that year and part of 2021 due to lockdowns and restrictions on travel and movement, Kammer concludes.
