Spain among biggest victims of crisis, warns IMF 18/07/2008 00:00

The IMF cut 2009 growth estimates by half a percentage point to 1.2 percent.

18 July 2008

MADRID - The International Monetary Fund on Thursday suggested that Spain will be among the economies worst affected by the current economic crisis, slashing its forecast for Spanish economic growth next year even as it raised growth predictions for the United States and the euro zone.

The IMF confirmed its April forecast for an expansion in Spanish GDP by 1.8 percent in 2008, but cut its growth estimates for 2009 by half a percentage point to 1.2 percent on the back of a sharper-than-expected slowdown in recent months.

"The Spanish economy is in a difficult situation," Charles Collyns, the IMF's deputy director for research, noted.

The IMF predicts that Spain will undergo one of the fastest decelerations of any of the countries analysed, with growth sliding from 3.9 percent in 2006 to 1.2 percent three years later - a contraction of 2.7 points.

In contrast, the euro zone economy as a whole is expected to slow by 1.6 percentage points over the same period, while the US is likely to contract by 2.1 points.

The global economic woes of accelerating fuel and food price inflation are compounded in Spain by a rapidly deflating property market after a decade-long real estate boom.

In contrast, the IMF raised its growth forecasts for the US and the euro zone and predicted global GDP will expand by 4.1 percent in 2008.

[El Pais / Ángeles Espinosa / Expatica]