The Organization for Economic Cooperation and Development (OECD) has raised growth forecasts for Spain this year to 1.7%, thus improving the estimate made in November by four tenths, although it shows the optimism of the Government, which calculates a rate of 2.1% It does improve that projected by the large national and international organizations (1.4% of the European Commission and 1.1% of the International Monetary Fund (IMF).
The organization forecasts that global growth will remain in 2023 and 2024, at 2.6% and 2.9% respectively, four tenths more than in the previous forecast, with “a gradual improvement as the burden of the income due to high inflation,” he alerted in his Economic Perspectives report released this Friday.
The OECD highlights the appearance of more positive signs, including the improvement in business and consumer confidence, the full reopening of China and falls in food and energy prices. But he expects global growth “to remain below trend rates in 2023 and 2024 and policy tightening will continue to have an effect.”
“Projected global growth during 2023 and 24 would be weaker than in any two-year period since the global financial crisis, excluding the dip at the start of the pandemic,” says the OECD, which forecasts that all but two G20 economies , have slower growth in 2023 than in 2022, “with China being a notable exception due to the relaxation of anti-Covid restrictions.”
The situation “is improving but the risks are still there,” said the OECD Secretary General, Mathias Cormann, at a press conference during the presentation of the forecasts. “We are facing a fragile recovery,” confirmed Álvaro Santos Pereira, an OECD economist.
Regarding inflation, the OECD warns that, although the headline rate decreases, “the core rate remains important” sustained by strong increases in the prices of services, higher margins in some sectors and cost pressures from tight labor markets.
It estimates that it will be 4% and 2.% in 2023 and 2024. It projects that inflation will moderate gradually, but will remain above the targets of central banks until the second half of 2024 in most countries.
For Spain, the projected inflation rate is 4.2% in 2023 (six less than in the previous forecast) and 4% in 2024, below the average. However, it corrects the underlying one upwards, which excludes the most volatile prices of energy and food.
By 2024, Spain will barely reduce its inflation by two tenths (4%), one of the highest rates in the OECD, although it is eight points less than the forecast made in November. It maintains the core at 3.7%, the third highest of the 13 economies analyzed for this year, only behind South Africa (4.7%) and Turkey (41.6%).
“The improving economic outlook remains fragile. Risks have balanced out somewhat better. Uncertainty about the course of the war in Ukraine and its broader consequences is a key concern,” the organization says, adding that ” The strength of the impact of changes in monetary policy is difficult to measure.”
In addition, “pressures in global energy and markets could also reappear, leading to further price spikes and higher inflation.”
The OECD warns that “the tense geopolitical situation, uncertainty remains high”, due to the war in Ukraine and its consequences for the world economy. A “major related risk is a renewed worsening of food security in emerging and developing economies,” she notes.
Pereira has said that monetary policies have to be aimed at continuing to reduce inflation and has called for prudence in fiscal policy.
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