MADRID – The International Monetary Fund (FMI) has adjusted its economic forecasts for Spain. According to the organisation, inflation in the country will be close to 4% in 2024. That´s four-tenths higher than the expected 3.5% for this year.
This comes in an environment of global economic slowdown. The FMI has revised downwards growth expectations for the Spanish economy. Growth of 2.5% was previously expected for this year. However, the fund now predicts growth of only 1.7% for the coming year in its autumn forecast. This cooling is attributed to the general economic slowdown in Europe, caused by higher interest rates and economic stagnation in Germany.
At the end of September, the Spanish Bank also warned of higher inflation than expected for this year and next year.
Positive news for the labour market
Despite this gloomy outlook, there is also good news. Unemployment in Spain is expected to fall to 11.3% in the coming year. This is a positive note in an otherwise mixed economic picture.
Inflation compared to other European countries
Although Spanish inflation this year will be lower than the 4.6% average for advanced economies, the FMI warns that inflation is expected to rise to 3.9% next year. This is higher than inflation expectations for major European economies such as Germany, France and Italy, which are 3.5%, 2.5% and 2.6% respectively for 2024.
Stricter monetary policy
The FMI notes that the slowdown in most eurozone countries is partly due to tighter monetary policies needed to control inflation. However, the effects of this policy are unevenly distributed across the different countries.