The International Monetary Fund (IMF) concluded this Friday's spring meeting in Washington without a joint statement (disagreements over the war in Ukraine), but "with a message of confidence".
This was said by the Spanish vice-president, Nadia Calviño, who has led the meetings of this session of the IMF. He warned that, despite the rapid response to the recent banking turmoil, "financial institutions and those responsible for fiscal and monetary policies must be vigilant".
Alfred Kammer, director of the Fund's European department, expressed himself in the same vein. According to the German official, it is absolutely necessary for the European Central Bank (ECB) to continue raising interest rates, while greater fiscal consolidation by governments would help fight inflation, the big challenge.
Kammer stated in a press conference that the Spanish economy is generally in a "pretty good" position.
In his response, he emphasized that Spain's growth in 2022 was very strong, so much so that it exceeded the IMF's forecasts. "This impulse will be carried over to 2023", he stressed. That is why the Fund has raised the forecast for 2023 by four tenths, up to 1.5%.
He explained, however, that the reduction of four tenths of the forecast for 2024, which leaves it at 2%, is a consequence of the effect of the tightening of monetary policy and more restrictive financial conditions derived of the financial turmoil.
These estimated growth figures for the Spanish economy are in line with the projections of the Bank of Spain, which in the latest perspectives places it at 1.6% this year. The central government calculates a GDP increase of 2.3% in 2023.
According to IMF statistics, Spain will be the economy with the strongest growth in the Eurozone. Its figures exceed the European average, which will grow by 0.8% this year (1 tenth more than the previous forecast) and by 1.4% in 2024 (minus two tenths).
According to Kammer, the smaller growth for Europe is due to the "effects of the Russian invasion of Ukraine", which caused a large impact on European economies, with an increase in energy prices and the impact on inflation These circumstances necessitated greater monetary adjustment, which reduced people's purchasing power, along with a higher cost of production.
But he insisted that the eurozone showed more resilience than had been expected. Despite this, he warned that things could be complicated by the risks of tight labor markets, another rise in energy prices or geopolitical fragmentation. Without forgetting that a possible failure to contain the risks to financial stability leads to a crisis. That is why he recommended the Europeans to concentrate their efforts on defeating inflation and safeguarding the banking system.
