Imf puts spain in same boat as greece, ireland and portugal

In their latest report the International Monetary Fund (IMF) discusses how the deterioration of the labour market in Europe has varied widely from one country to another during the last crisis. For example, where in northern European countries unemployment has scarcely increased and the time-reduction schemes have worked, in other countries like Spain and Ireland, where the bursting of the housing bubble has left many low-skilled workers unemployed, unemployment has soared. The IMF emphasises in their report that unemployment among the young, in particular, has increased substantially. He warns that the “extreme case” of Spain, where nearly half the young people are unemployed, presents a picture of a “lost generation.”

The IMF report predicts that “the recovery is taking hold in Europe”. They expect growth in Europe of 2.4% in 2011 and 2.6% in 2012 – provided that the increase in food prices and energy is temporary and doesn’t cause widespread inflation requiring severe hardening of monetary policies.

The expected growth for advanced economies in Europe is 1.7% and 1.9% in 2010 and 2011, respectively. The IMF maintains its forecast, published last month in its global report, for euro zone countries (1.6% and 1.8%) and Spain (0.8% and 1.6%). That is to say that this year the Spanish economy will grow half that of the euro zone and one-third that of the whole of Europe.

Throughout the report, when analysing the euro zone countries, the IMF refers to Spain as being in the same category as the three countries that have needed rescue: Greece, Portugal and Ireland. The IMF, which has generally welcomed the reforms undertaken in Spain and has often emphasised the differences between Spain and these other countries, does not explain specifically why they have categorised Spain this way or what the defining criteria are. However, it appears they are the countries slowest in recovery, with problems of competitiveness, a high deficit and a significant imbalance in their current account.

Source: Kyero.com