IMF announces new fall in economic forecast for Spanish economy

Today the director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, has announced some of its forecasts for world economic growth due to be published officially in January 2009. The predictions made by the IMF are even worse than the current forecasts for the Spanish economy.

During the conference entitled ‘Spain in the IMF and World Bank – fifty years of relationship’ Strauss-Kahn insisted that 2009 would be a ‘very difficult’ year and that recovery would not happen until 2010. The IMF revised its current predictions for the Spanish economy from a fall of 0.7% in GDP to a fall of 1%.

The Spanish president, José Luis Rodríguez Zapatero, replied to the negative economic forecast made by the IMF saying that ‘it is not unusual for international organizations, including some of the most respected, to make mistakes in their forecasts’.

The governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, also commented saying that he regretted that the position of Spain in the IMF and World Bank was not reflected by the importance of the Spanish economy in a world context.

However, he recognised that this had been partially corrected in the latest reforms approved by the IMF this year.

Nevertheless, Ordóñez also demonstrated his confidence that Spain would continue to be fully committed to both the IMF and World Bank and would give its complete support for reforms in global financial systems and new challenges ahead.
The Spanish deputy president and minister for the Economy, Pedro Solbes, also assured that Spain is in a position to play an important part in reforms to the international financial system together with the IMF and World Bank. Moreover, Solbes explained that Spain placed great importance on international cooperation in addition to wanting to have a more active role in these organizations.

He said ‘we believe that we are providing and can provide a lot to the efforts of regulatory reforms and supervision of the international financial system’. However, Solbes also emphasised the ‘intense effects’ that the international financial crisis was having on the Spanish economy which was why he advocated following through with structural reforms in order to leave the current situation behind as quickly as possible and become more robust and flexible.

Solbes also insisted in the presence of representatives from ten of the biggest Spanish banks and building societies that the financial system must continue to be the backbone of the Spanish economy. During the act of signing an agreement with the Official Institute of Credit Solbes said that he was ‘proud of the work and cooperation of all participants in injecting liquidity into Spanish businesses’.

The agreement signed today will make 10,900 million euros available to self employed businessmen and women as well as small and medium sized companies for investment projects and corporative financial needs. The amount agreed this year is 48% higher than in 2007.