The International Monetary Fund 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.
“A shift in resources toward Spain’s competitive export sector, with the services sector creating most new jobs, has played an important part in the rebound,” 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.
– Job woes –
But dark clouds remain, however, particularly where unemployment is concerned, 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.
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, the Organisation for Economy Co-operation and Development (OECD) warned in March in a review of Spain’s economy.
The IMF’s growth forecast is in line with those of the government and the Bank of Spain.
The central bank sees the economy expanding by 3.1 percent this year while the Prime Minister Mariano Rajoy’s conservative government sees growth of 3.0 percent. (AFP)