Spanish economic outlook raised as property market drives recovery

Jobs, homebuyers and consumer confidence have all returned to Spain in a big way.

The International Monetary Fund (IMF) has increased its economic outlook forecast for Spain, suggesting that the country’s economy will perform much better than previously expected…

The IMF increased its gross domestic product (GDP) growth forecast for the year to 3.1 per cent this week, up from 2.5 per cent earlier in the year.

In raising Spain’s outlook, the IMF remarked that the country’s “continued fiscal consolidation has reassured markets and further boosted confidence. These collective efforts of Spanish society are the foundation upon which the recovery has been constructed”.

These welcome words were underpinned by data from Spain’s National Statistics Institute (INE), which revealed that real estate transactions across the country have increased by 9.4 per cent in the first quarter of the year compared to 2014.

This increase has seen prices rise steadily across the country by an average of 1.5 per cent, but by sharper margins in many of Spain’s more popular regions such as the Costa del Sol. Although unemployment remains stubbornly high in many regions, Spain’s attractiveness among foreign buyers is helping the real estate industry make up for the domestic shortfall, as is the strong British pound against the euro – which is making Spanish property more affordable for buyers from the UK.

In the wider economy, the weak euro is helping to pull in a greater number of visitors to Spain, while the country’s recent economic reforms have now fully taken root, which in turn has helped accelerate job creation.

The IMF went on to state: “Spain has rebounded strongly and employment is increasing, helped by past reforms. However, the level of unemployment is still high and vulnerabilities remain.”

Looking ahead, the IMF added that if further reforms are allowed to be implemented – such as making it easier for people to start their own business, and cheaper for employers to dismiss long-term and permanent workers – then the Spanish economy could also grow by a further 2.6 per cent in 2016.