IMF raises Spain's growth forecasts as domestic demand remains strong
The International Monetary Fund raised its economic growth forecast for Spain to 3.2 percent for this year and to 3.0 percent in 2006, on the back of strong domestic demand, while lowering its estimates for the euro-zone and maintaining them for the global economy. The IMF had previously forecast an increase in Spain's gross domestic product of 2.7 percent this year and 2.9 percent in 2006. Its estimate for global output was held at 4.3 percent, while the forecast for euro-zone GDP was lowered to 1.2 percent from 1.6 percent this year and to 1.8 percent from 2.3 percent the following year, in part due to the impact of higher gasoline prices on private consumption. Spain, along with Japan, was one of the few economies in the industrialized world to have their growth forecasts raised.The IMF also predicted that unemployment, one of the endemic problems of the Spanish economy, would fall to 9.1 percent this year - from 11 percent in 2004 - and to 8.0 percent the following year. However, inflation - another of the persistent problems facing the domestic economy - is expected to remain at 3.0 percent or above this year and the next, over one percentage point higher than in the euro zone.
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