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ARCHIVED - The war in Ukraine shoots up Spanish inflation and cuts economic growth
Inflation in Spain is expected to reach 5.3% while the GDP will grow at a slower rate
In its first projections since the war broke out in Ukraine, the International Monetary Fund (IMF) has predicted that the Spanish economy will grow less this year than previously expected and that consumer costs will shoot up by 5.3%.
Before Russia invaded in February, the IMF estimated that the economy would grow by 5.8%; however, this figure has now been revised downwards to just 4.8%. The Bank of Spain is even less optimistic, suggesting that inflation will grow to a wallet-busting 7.5% by the end of 2022.
While the Spanish government itself won’t update its predictions until the end of this month, President Sanchez has already confirmed that “a downward revision of the GDP growth figures in Spain” is inevitable, at the same time reassuring that this “does not mean that Spain is not going to continue growing.”
Whichever figures are to be believed, the news is not good for Spanish consumers, who have already endured staggering rises in fuel, electricity and even groceries so far this year.
On the other hand, the IMF believes that Spain will be one of the European countries whose economies will grow the most both this year and next. However, this is also relative since Spain registered the greatest economic collapse of all advanced countries in 2020 and grew below the European average last year.
While no financial analysts predict a recession beyond the countries directly involved in the war, the IMF is clear that the conflict will contribute to a significant slowdown in global growth in 2022.
"The invasion has contributed to fragmenting the economy, while a significant number of countries have cut commercial ties with Russia, and risks derailing the post-pandemic recovery," the agency has warned, adding that it is now highly unlikely that world production and employment levels will rebound fully before 2026.
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