The IMF cuts its growth forecast to 1.1% for this year and expects inflation to moderate to 3.7%
Labor market resistance, lower supply chain risks and some containment of inflation escalation have obscured the worst omens hanging over the global economy a few weeks ago. But there is one factor that has been decisive above the rest for analysts to remove the risk of a recession that appeared in their estimates as practically inevitable in the summer.
This factor is none other than the moderation in commodity prices and especially gas, whose reference futures contracts in Europe are currently trading at EUR 58 per megawatt hour. A collapse of 80% compared to the 300 euros reached in August.
The postponement of the energy crisis is not only noticeable in terms of prices. Marko Mrsnik, director of sovereign ratings at S&PGlobal, recalls that reserves in Europe are currently at 90%. “This is very important, because despite the cold it should still be above 50% at the end of winter, which will facilitate replenishment efforts and prevent a possible risk of shortages,” he says. A view that differs far from what the consensus held in the summer, when there were even supply cuts in some countries such as Germany, which is heavily dependent on Russian gas. The fact that Spain is not is behind the overall improvement in 2022 estimates.
The IMF was the latest to join this trend, raising its previous forecast by six-tenths to 5.2%, helped by improving tourism and job creation. The institution also appreciated the labor reform very positively “with a significant proportion of employees moving from temporary to permanent contracts”.
The economic vice president, Nadia Calviño, rated this new IMF estimate as “very positive”, which “endorses” the government’s economic policies, especially with regard to the response to inflation and fiscal responsibility. In particular, the IMF directors highlighted the “timely policy” of the Spanish authorities to help households and businesses cope with rising energy prices, and welcomed recent moves towards better targeting and better preservation of the price signals in the support package approved for 2023.
For this 2023, however, it lowers its growth forecast from 1.2% to 1.1%. And pre-pandemic GDP will not recover until 2024. The IMF also expects inflation to moderate from 8.4% to 3.7%, in the heat of the Iberian exception, the normalization of fuel prices and also the salary increases agreed so far, “limited”, the agency said. However, the core will remain above 6%, so price pressure will remain very much in the coming months.
The Funcas analyst panel has revised its growth forecast for this year upwards by two tenths. But it remains at a limited 1.3%. There are other companies that are even more cautious and limit the recovery capacity of the national economy to 0.9%, as is the case with S&P Global. A remarkable gap compared to the government’s own forecast (2.1%) and widening against the more than 5% growth that all analysts have already taken for granted over the past year.
From the rating agency, they attribute this difference to a worse evolution of investment and consumption than what the Executive expects from Pedro Sánchez. They warn that the decline in household savings rates will continue in the coming months, “taking into account that interest will go into citizens’ pockets and the ability to consume will be less.”
In any case, the dance of figures between the different houses remains strongly influenced by the enormous uncertainty that still exists about the evolution of the war in Ukraine, which will undoubtedly continue to mark the future of the European economy in the future. next months.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
