AFP, Madrid :
The International Monetary Fund (IMF) on Tuesday raised its 2017 growth forecast for Spain, citing strong exports, a rebound in consumer demand and a booming tourism sector.
The IMF now expects the eurozone’s fourth-largest economy to grow by 3.1 percent this year, compared with its April forecast of 2.6 percent.
The Washington-based body said it could not rule out that the growth could be even higher than its latest estimate as a result of the “momentum” created by the government’s economic reforms.
It predicted the Spanish economy will expand by 2.5 percent in 2018, up from a previous IMF forecast of 2.1 percent.
“Spain’s economic recovery remains strong, with consumption, investment, and net exports all contributing to a more balanced growth pattern,” the IMF said.
“A dynamic services sector, much of which is export-oriented, has replaced an outsized construction sector, and together with a recovery in manufacturing contributed to the sustained improvements in the current account balance.”
Spain’s economy grew by 3.2 percent in 2016 and in 2015 as it recovered from a severe crisis caused in part when a property bubble burst in 2008.
Tourism, which accounts for around 11 percent of Spain’s economic output, has benefited from a surge in visitor numbers as security concerns in some other rival Mediterranean holiday destinations such as Turkey and north Africa diverted tourists to the country.
Spain received 75 million visitors in 2016. It was the fourth consecutive year of record numbers of arrivals and industry lobby group Exceltur said last week it expects tourism activity to increase by 4.1 percent in 2017.
But dark clouds remain, particularly in unemployment, the IMF said.
Spain’s jobless rate, which peaked at 27 percent in 2013 just before it began to emerge from a severe five-year financial crisis, stood at 18.7 percent in the first quarter, the second highest level in the eurozone after Greece’s.
“Youth and long-term unemployment rates are still among the highest in Europe, temporary hires have continued to outnumber permanent ones and involuntary part-time employment has remained high,” the IMF said.
“To be the most effective, active labour market policies should complement efforts to improve the quality of formal education and training.”
Almost 40 percent of young Spaniards are unemployed with few skills, the Organisation for Economic Cooperation and Development (OECD) warned in March in a review of Spain’s economy.
And close to half of the jobless have been unemployed for more than a year, reducing their chances of re-entering the labour market as their skills become obsolete, it added.
The IMF’s chief of mission for Spain, Andrea Schaechter, urged Spain to tailor its aid programmes to help youths find work, and to evaluate the effectiveness of existing programmes.
In terms of the banking sector, which underwent a major overhaul in 2012 when the Spanish government was forced to seek a bailout from European creditors to prop up failing lenders, the IMF said the financial sector has emerged leaner and stronger.
But it once again called for an improvement in the profitability of the banking sector, which has already seen about a third of jobs and branches abolished in recent years.
Spain has “successfully managed to pull its financial system out of the crisis. The authorities have really grabbed the bull by the horns,” said Udaibir Das, who is responsible for evaluating the Spanish financial system for the IMF.
“We can probably do a little more to reduce costs,” he added.
Santander’s acquisition last month of its smaller rival Banco Popular, which was on the brink of bankruptcy, had removed a “source of uncertainty”, the IMF said.
The International Monetary Fund (IMF) on Tuesday raised its 2017 growth forecast for Spain, citing strong exports, a rebound in consumer demand and a booming tourism sector.
The IMF now expects the eurozone’s fourth-largest economy to grow by 3.1 percent this year, compared with its April forecast of 2.6 percent.
The Washington-based body said it could not rule out that the growth could be even higher than its latest estimate as a result of the “momentum” created by the government’s economic reforms.
It predicted the Spanish economy will expand by 2.5 percent in 2018, up from a previous IMF forecast of 2.1 percent.
“Spain’s economic recovery remains strong, with consumption, investment, and net exports all contributing to a more balanced growth pattern,” the IMF said.
“A dynamic services sector, much of which is export-oriented, has replaced an outsized construction sector, and together with a recovery in manufacturing contributed to the sustained improvements in the current account balance.”
Spain’s economy grew by 3.2 percent in 2016 and in 2015 as it recovered from a severe crisis caused in part when a property bubble burst in 2008.
Tourism, which accounts for around 11 percent of Spain’s economic output, has benefited from a surge in visitor numbers as security concerns in some other rival Mediterranean holiday destinations such as Turkey and north Africa diverted tourists to the country.
Spain received 75 million visitors in 2016. It was the fourth consecutive year of record numbers of arrivals and industry lobby group Exceltur said last week it expects tourism activity to increase by 4.1 percent in 2017.
But dark clouds remain, particularly in unemployment, the IMF said.
Spain’s jobless rate, which peaked at 27 percent in 2013 just before it began to emerge from a severe five-year financial crisis, stood at 18.7 percent in the first quarter, the second highest level in the eurozone after Greece’s.
“Youth and long-term unemployment rates are still among the highest in Europe, temporary hires have continued to outnumber permanent ones and involuntary part-time employment has remained high,” the IMF said.
“To be the most effective, active labour market policies should complement efforts to improve the quality of formal education and training.”
Almost 40 percent of young Spaniards are unemployed with few skills, the Organisation for Economic Cooperation and Development (OECD) warned in March in a review of Spain’s economy.
And close to half of the jobless have been unemployed for more than a year, reducing their chances of re-entering the labour market as their skills become obsolete, it added.
The IMF’s chief of mission for Spain, Andrea Schaechter, urged Spain to tailor its aid programmes to help youths find work, and to evaluate the effectiveness of existing programmes.
In terms of the banking sector, which underwent a major overhaul in 2012 when the Spanish government was forced to seek a bailout from European creditors to prop up failing lenders, the IMF said the financial sector has emerged leaner and stronger.
But it once again called for an improvement in the profitability of the banking sector, which has already seen about a third of jobs and branches abolished in recent years.
Spain has “successfully managed to pull its financial system out of the crisis. The authorities have really grabbed the bull by the horns,” said Udaibir Das, who is responsible for evaluating the Spanish financial system for the IMF.
“We can probably do a little more to reduce costs,” he added.
Santander’s acquisition last month of its smaller rival Banco Popular, which was on the brink of bankruptcy, had removed a “source of uncertainty”, the IMF said.
