The International Monetary Fund, yesterday raised its growth forecast for the Spanish economy this year by half a point to 2.4%, although it also warned that inflation is reluctant to moderate and that sluggish investment and rigidities in the labour market could weigh down developments in the medium term.
The Fund recalls that investment remains below 2019 levels, which is weighing on productivity growth per hour worked and could stifle the recovery in the medium term.
The Fund noted in its published Article IV that this upward revision is mainly due to the “solid” performance of services exports, which, together with public consumption, have been the main drivers of recent growth. For its part, the labour market has maintained its “good performance” thanks to the “influx of immigrants”, who would have accounted for two thirds of new jobs in recent years, according to a recent Fedea report, and to the increase in the activity rate, with a 3.1% rise in full-time equivalent jobs, which will feed consumption in the coming months, although the pace of new jobs cannot be expected to be maintained in the future: despite the strength of GDP, employment will slow to 1.3% this year.
