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Edurne Martínez
Madrid
Thursday, 26 September 2024, 18:17
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The Paris-based Organisation for Economic Co-operation (OECD) Development) has not updated its economic forecasts for Spain since May and since the fifth month of the year a lot has changed. Back then the OECD predicted that the Spanish economy would grow by 1.8% this year, improving its previous projection by three tenths of a point. As of Wednesday this week it has boosted that prediction by one whole point to 2.8%. This is the biggest improvement highlighted by the organisation that brings together 34 countries to report on the economic outlook for each. In this, their latest interim report, it highlights the "robust progress" made by three economies above the rest: Canada, the United Kingdom and, of course, Spain.
The forecast of 2.8% is in line with the latest estimate from the Bank of Spain, which just a few days ago improved its calculations by half a point due to the "positive surprise" in the performance of the Spanish economy during the first two quarters of 2024, above all due to the good performance of international tourism and exports of goods. It should also be noted that Spain's INE national statistics institute has revised upwards its estimates for recent years and now maintains that the economy grew by 2.7% in 2023, two tenths of a percentage point more than previously thought.
The OECD data is an improvement on the "prudent" forecasts of Spain's central government, which on Tuesday updated its macroeconomic picture and placed growth at 2.7%. Carlos Cuerpo, Minister of Economy, Commerce and Business, said that GDP could grow even more this year - in line with the Bank of Spain and now the OECD's predictions - but that his cabinet was remaining "prudent" because the general budgets for each ministry were drawn up on this basis of growth.
Consumption will continue to be the pillar on which much of the country's growth is based. This consumption will be boosted by a gradual fall in inflation that, according to the OECD, will close this year at 3%, four tenths of a percentage point less than last year. Moreover, by 2025 the OECD already calculates that the consumer price index will fall to 2.1%, very close to the target set by the European Central Bank (ECB). Core inflation, meanwhile, will close this year at 2.6%, for the first time below the general rate since the inflationary crisis began with the outbreak of the war in Ukraine more than two years ago.
For next year, the forecasters for OECD estimate that the Spanish economy will grow by 2.2%, two tenths of a percentage point more than in previous forecasts and in line with the Bank of Spain's calculations. This is much higher than for neighbouring countries. This think-tank forecasts that Germany will grow by only 0.1% in 2024 but with a spurt of growth to 1% in 2025, one tenth of a percentage point less for both years. France is expected to grow by 1.1% in 2024 and 1.2% in 2025, four tenths of a percentage point more and one tenth less respectively. Italy should grow by 0.8% this year and 1.1% the following year, one tenth of a percentage point more and one tenth of a percentage point less respectively.
In this report the authors do not go into detail on internal issues in each country, as it did in its previous Economic Outlook Interim Report for May, in which it warned that pension spending was detracting from Spain's growth . In this case, the OECD recommended raising green taxes and the super-reduced IVA (sales tax) rates to increase revenue in the face of the challenge of an ageing population, which is a more pressing problem in Spain than in other OECD-member nations.
The Ministry of Economy has a very positive assessment of these forecasts published by the OECD and stated that the data "once again confirm the strength of the Spanish economy." A ministry spokesperson pointed out that, according to the OECD, Spain will continue to lead growth among the main economies of the euro area in 2024 and 2025, with an expected increase in GDP this year that will be four times that of the eurozone average.
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