IMF reduces Spain’s growth forecast due to political uncertainty

The International Monetary Fund (IMF) has announced its World Economic Outlook Update, which conveys a message of optimism for the global economy. Spain, however, gets a special mention as the only developed economy where growth prospects have been cut back.

“Growth in Spain, which has been well above potential, has been marked down slightly for 2018, reflecting the effects of increased political uncertainty on confidence and demand,” reads the report.

The Spanish economy is projected to grow by 2.4% in 2018, one tenth of a point below the October forecast, and by 2.1% in 2019, one tenth above the earlier projection, probably on the premise that political uncertainty will have subsided by then.

Complacency is actually one of the risks we should guard against

IMF chief Christine Lagarde

As for the global economy, the outlook is optimistic.

“Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent. The revision reflects increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes,” says the report.

Despite the positive figures, IMF managing director Christine Lagarde urged governments not to rest on their laurels. “Complacency is actually one of the risks we should guard against,” she said, urging countries to enact reforms that will prevent future financial crises.

At a press conference in Davos, Switzerland, which is hosting the World Economic Forum, Lagarde noted that a fifth of emerging and developing countries have experienced drops in per capita income, and underscored the uncertainty surrounding the financial sector due to a progressive interest rate hike.

English version by Susana Urra.