IMF triples its growth forecast for the Spanish economy

The International Monetary Fund has raised its forecast for Spanish economic growth for this year from 0.2 percent to 0.6 percent.

The revision was included in the IMF’s updated World Economic Outlook released Tuesday. Only Britain saw a bigger upward revision of expected GDP growth, while Japan’s outlook was also improved by 0.4 percentage points.

At a news conference to present the updates, the IMF’s chief economist, Olivier Blanchard, said the drag on the global recovery and the impact of fiscal consolidation on the pace of activity had eased.

However, he said the situation in southern Europe continued to be worrying, with the recovery there still weak.

The IMF’s improved estimate is better than the European Commission forecast of GDP growth in Spain this year of 0.5 percent. The Spanish government is predicting an increase of 0.7 percent, although it has indicated that that is a conservative forecast that may be revised upward. The consensus forecast of a panel of experts polled by Spanish think-tank Funcas is for growth of 0.9 percent.

Despite the revision, the IMF’s forecasts place the pace of growth in Spain for this year among the lowest for the large economies alongside Italy, where GDP is also expected to rise by only 0.6 percent.

The IMF also expects growth in Spain for 2015 to remain below 1 percent at 0.8 percent, although even that is an improvement on the estimate of 0.5 percent included in its October World Economic Outlook report.

The IMF raised its forecast for growth in the euro zone by 0.1 percentage points for this year and the next to 1.0 and 1.4 percent respectively. “The euro area is turning the corner from recession to recovery,” Blanchard said in a statement, but added that the improvement would be more modest in southern Europe where exports are driving growth but where domestic demand is being undermined by high private and public debt and financial market fragmentation.