World Economic outlook - Italy and Spain will remain in recession 2012-2013 : Italy and Spain will remain in recession next year, according to the IMF, placing a question mark over their ability to refinance their banks and generate sufficient goodwill from international lenders to prevent them from going bust. Fears that Spain and Italy will need a bailout from Brussels continue to weigh on global growth following the reluctance of Germany, Finland, Holland and Austria to sanction a fund capable of handling both countries.
The Spanish economy will recoil less than expected in 2012, although not returns to growth in 2013, year in which GDP will shrink 0.6 per cent, as reported by this Monday the International Monetary Fund (IMF) in its review of data from global growth.
The global economic Outlook report that the Spanish economy reverses a 1.5% in 2012 and not 1.8 per cent as indicated in April, and will remain in recession in 2013, with a fall of 0.6% rather than a growth of 0.1% forecast in the previous report.
The improvement expected the Spain Fund in 2013 will be delayed with a contraction of six tenths, after that in April the quarterly revision of growth data present a panorama of modest output of the recession.
In 2011, the Spanish economy was out of recession with growth of 0.7 per cent, a rate which IMF believes it may not be.
The IMF also presented its estimates of global deficit in its Fiscal report, which, despite not quantify the adjustments amounting to 65 billion euros announced by the Spanish Government on July 11, cut the previous forecasts.
By 2012, the IMF expected a reduction in the deficit from 8.9% from 2011 to 7% (a worsening of a point from the April forecast), whereas for 2013, provides lower up to 5.9% of GDP.
These figures placed the Spanish deficit for this year above the 6.3% asking Spain to its European partners, while the data of 2013 also exceeds 4.5% deficit marked extra year granted by the Finance Ministers of the euro as a step prior to the objective of 3% in 2014. The IMF stressed that in the euro area “tensions in financial markets and on sovereign debt have increased,” approaching levels close to the end of 2011. “Clearly, the downside risks remain large and reflect the risks of delays or insufficient political action”, despite which the IMF congratulated the leaders of the EU for “steps in the right direction” agreed at the Summit at the end of last June. The Fund stressed the importance of the agreement in the European Union to capitalize the Bank directly without going through Governments, already that if the measures “are implemented in full, will help break the adverse bond between banking and sovereign debt and create a banking union”. “Countries in the periphery (in the euro) need to maintain the pace of reforms and commitments, to what they need financial support and an environment of growth, which should facilitate the ECB and other mechanisms of the eurozone,” the IMF said.
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