IMF alarm on Spain: possible increase in tensions and recession until 2014

The International Monetary Fund warns that Spain "has to face very difficult prospects and a prevalence of risks" even if the 100 billion aid plan for the financial sector approved in Brussels has helped to reduce short-term risks. However 'market tensions could intensify, putting the country's access to markets at risk, especially if the outflow of funds cannot be stopped and if further tensions emerge in other parts of the Eurozone.' Among the risks listed for Spain also 'a deleveraging faster than expected for the private sector and heavier than expected repercussions on growth from the consolidation of the public budget'. Spain, underlines the Fund, "is facing constantly increasing pressure on the markets and high refinancing costs, with possible negative repercussions for the rest of Europe as well". Estimates for Spain predict that 2012 will close with a GDP down by 1,7% (+0,7% in 2011) against the -1,5% forecast only a month ago by the Fund. The decline will continue in 2013 (-1,2%) even if at a slower pace thanks to the good contribution of exports and the lower weight of the construction sector, with a first rebound only in 2014 (+0,9%). The public deficit is forecast at 6,3% of GDP this year (8,9% in 2011), 4,7% in 2013 and 3,6% in 2014.