The latest report by the International Monetary Fund ( IMF), the Spanish economy is forecast to grow by 6.4% in 2021, making it the fastest growing economy in Europe.
It will also be one of the fastest growing major economy in the world pegging the United States according to the IMF´s biannual ‘World Economic Outlook’ report.
The new figure is an increase of five tenths of a percentage point on the previous forecast last autumn.
For 2022, the forecast for Spain is that GDP will grow by 4.7%, almost one percentage point above the European Union average of 3.8%.
The outlook for global growth has also improved to a bullish 6% in 2021 and a solid 4.4% in 2022.
The report underlines that the upward revision reflects additional fiscal support in a few large economies as well as expected vaccine-powered recovery for the second half of the year.
The vaccine should allow for a return to increased mobility and world travel although ” high uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions”.
However, the despite the improved outlook for the world and Spain the IMF calculates that Spain will still have the highest unemployment rate in Europe with an estimated 16.8% of the workforce without jobs.
Although expected to dip slightly in 2022 to 15.8% in 2022 the IMF does not expect Spain to recover its pre-pandemic unemployment rate until 2026, when it forecasts a 14.4% rate (in 2019 it was 14.1%).
Andrea Schaechter, head of the IMF’s Spain mission, had earlier warned that the economy is not expected to recover its pre-pandemic level until mid 2023.
Spain´s structurally high unemployment rate has been a scourge on successive goverments and the economic fallout of the pandemic has only added to the strain which is expected to worsen in the coming months as the government’s ERTE furlough scheme comes to an end next month.
According to the latest figures released the national unemployment rate stands at 3,949,640 for March an increase of over 700,000 workers when compared with the February 2020 figure which was the last full month before the governments Covid-19 restrictions were imposed.
With the hoped for increase in vaccine led mobility the Spanish tourist industry which represents some 14% of GDP is holding it´s breath for a return of visitors and holidaymakers after the catastrophic falls in tourist numbers and revenue in 2020 and the first quarter of 2021 which has caused widespread closures of businesses and job losses.