The Spanish economy has performed “fantastically” in recent years, with “truly exceptional” growth rates of around 3%, which has led to an upward revision of the forecasts for 2025 and 2026 of the International Monetary Fund (IMF), which recommends the country undertake reforms to improve productivity, as well as active labor market policies and advance fiscal consolidation, for which “it will be essential to agree on a budget.”
In his regional analysis for Europe, Alfred Kammer, director for the Old Continent of the IMF, has pointed out that one of the main drivers of Spanish growth was exports of serviceshighlighting that, beyond tourism, information and communication technologies and new sectors also played a leading role, which “is excellent news for the Spanish economy.”
In addition, activity in the country has also benefited greatly from the employment boomwhich has allowed unemployment to be reduced, with an important role for immigration, whose increase has been used by Spain to boost GDP figures on the supply side.
“We expect growth to remain solid in the short term, but to slow down in the medium term,” said the German economist, for whom, looking to the future, Spain should focus on reforms that improve productivity, especially in newer sectorsas well as in the implementation of active labor market policies and increasing participation rates in the face of the aging of the population.
Fiscal consolidation and adjustment
In this sense, the IMF director considers it important that Spain also focuses on fiscal consolidation, for which “it will be essential to agree on a budget that allows for the implementation of higher quality measures”, recalling that it has recommended that the Spanish Government advance the fiscal adjustment as far as possible, which would help generate confidence in the market, protecting against shocks and entering a virtuous circle.
“Interest rates would fall more quickly, which favors private sector investment, which generates growth, and growth generates tax revenue,” he summarized.
Housing access crisis
On the other hand, regarding problems related to housing, the IMF official recalled that Spain is not the only country where housing is a major problem, pointing out the need for governments to act to address the housing affordability crisis, especially for young people.
In this sense, among the issues to be addressed, he has pointed out the need to work on the offer; with planning and zoning actions to allow more housing to be built; as well as the decrease recorded in social housing observed in recent decades.
“This prevents young people from moving to high productivity centers, which are often located in urban centers and When labor cannot move where it is needed, or productivity is high and wages would be higher, it creates a big dent in growth.“, he stated, warning that this harms not only the people affected, but also society.
“Hence the call to Spain, but also to many other European countries, to focus on the housing crisis, the housing affordability crisis, and move. Not only because of affordability problems, but also because of growth problems,” he added.
