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IMF lifts Spain's 2017 economic growth forecast

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Staff Writer | Wednesday July 19, 2017 7:57AM ET
Spain bank
Europe   Spain restructured its banking sector

Spain's economy is expected to expand by 3.1% this year, the International Monetary Fund said.


This is a more robust pace than the organization had previously forecast.

Strong consumption, investment and exports have helped to keep Spain's four-year economic recovery on track.

The country's gross domestic product likely surpassed its pre-crisis level in the second quarter of this year, the IMF said.

Spain's economy could end up growing more than 3.1% in 2017, the IMF said, if momentum from past reforms accelerates more than expected.

Spain restructured its banking sector and made tweaks to its labor laws several years ago to try to boost growth after the country plunged into recession when a building boom went bust.

In April, the IMF had said it expected Spain's economy to expand by 2.6% this year. It grew 3.2% in 2015 and 2016.

The IMF called on Spanish authorities to take advantage of robust economic growth to focus on chipping away at public debt, which remains high at around 100% of GDP.

Spain could, for instance, boost revenue by expanding the products that are fully liable to value-added tax, the IMF said.

VAT collections in Spain are significantly lower as a percentage of GDP than in other European countries, the IMF noted, because many items are taxed at a reduced rate.

 

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