The IMF chief economist: “Spain is not only growing because of its workforce, it has improved in productivity” | Economy | EUROtoday

The International Monetary Fund is a kind of nice symbols of the worldwide financial order based after the Second World War, champion of multilateralism and free commerce, below the management of the United States. Now the main energy—and, by the best way, the Fund’s largest shareholder—is popping that very same order the other way up. When the Frenchman Pierre-Olivier Gourinchas (Montpellier, 57 years previous), chief economist of the establishment, spoke to EL PAÍS final Monday in Brussels, Donald Trump threatened Europe with extra tariffs if it doesn’t obtain the sovereignty of Greenland. The menace is raining on a commerce struggle that started in 2025, although the worldwide economic system reveals resistance, as mirrored within the newest IMF projections.

Ask. You have simply known as to keep away from a tariff escalation between the United States and Europe because of the Greenland battle, however how do you reply to Donald Trump’s Administration?

Answer. Our job is to not give recommendation about retaliation. What we will do, basically, is warn of the risks to the worldwide economic system and stability {that a} full-blown commerce struggle entails. We have the instance of the interwar interval, after the Great Depression, when international locations turned in the direction of protectionism, started with tit for tat and international commerce collapsed, which significantly aggravated the disaster. There are all the time commerce disputes, however they should be resolved by means of consensual mechanisms; tariffs shouldn’t be used as an financial weapon.

P. Although, in 2025, tariffs haven’t been as dangerous as feared.

R. Yes, they’ve induced harm, however different parts have compensated for it. In addition, international locations reached commerce agreements and the typical last tariff remained at 18.5%, under projections, and the personal sector confirmed super adaptability, redirecting its provide chains. Global commerce remained buoyant regardless of the commerce struggle, however the long-term impact is bigger, as you lose effectivity and your prices rise, it’s one thing we count on. In the top, The United States is the one paying these tariffs, the information reveals. You have to think about them as an inner tax. Furthermore, now we may have extra disruptions, the mere uncertainty can have an effect on exercise.

P. All in all, the United States would be the most dynamic economic system within the developed world in 2026, in keeping with the newest forecasts. Is it honest to say that, general, the Trumpeconomy has it labored?

R. Tariffs have damage, however there have been components which have pushed in the other way, such because the increase technological, which has been a key think about 2025 and will likely be in 2026. Fiscal coverage has been expansive and the Federal Reserve has been reducing charges although inflation stays shut to three%. Tariffs have raised inflation and individuals are very involved about commodity costs. Policies that will enhance demand within the economic system and result in extra sustained inflation will not be essentially good insurance policies from the standpoint of all the stability of the US economic system.

P. Is the White House’s tried interference within the Federal Reserve seen as a crimson line for the IMF?

R. The independence of central banks is completely important, it is likely one of the most necessary classes of current years. If we take a look at what the inflation episode of the Nineteen Seventies was like and what it has been like now, we see that there was a really totally different dynamic and it’s because of the credibility of the central banks, which allowed disinflation to proceed between 2021 and 2024 with out inflicting main recessions. That credibility got here from the boldness that banks may present worth stability, and that confidence was as a consequence of their capability to deploy with out interference all of the instruments at their disposal to realize this. If that credibility is misplaced, inflation expectations change into unanchored, which means extra inflation is anticipated, and that results in extra volatility within the international trade market, extra macroeconomic instability, and fewer development.

P. The world has skilled robust shocks since 2020 — the pandemic, the value spiral, the invasion of Ukraine, the rise in tariffs — with out main recessions. Do you suppose there’s a paradigm shift, that capitalism has change into extra resilient to the shocks And that, with enough stimuli, main crises will be averted?

R. It could be harmful to suppose that. There has been resilience, objectively. Where there was probably the most has been in rising markets, and never solely with the pandemic, however within the final 20 years. Before, they had been very weak to the habits of superior economies and monetary markets. This time, charges rose from zero to five% within the United States and different international locations and there have been no main crises in rising economies. They have change into extra resilient, they’ve improved their financial insurance policies, their financial insurance policies and the way they handle their fiscal insurance policies. If you take a look at each developed and rising economies, to take care of the Covid pandemic, a typical wartime quantity of sources was deployed, equal to 10 or 15 proportion factors of GDP in a single or two years, simply to assist companies, households and banks. That definitely labored, however you possibly can solely do it as soon as. Now we should construct that fiscal area. Public incentives generally is a nice assist, however you want to have the ability to rely on them. And that’s not clear in lots of locations, if some international locations now wanted to deploy support for 10% or 15% of GDP, I’m not certain that the markets would observe them.

P. What particular issues do you see within the eurozone, which has additionally averted recession, however not slackness?

R. Well, development has been comparatively sturdy, from 1.4% final yr, 1.3% is anticipated in 2026 and one other 1.4% in 2027. The 2026 projection has been improved as a consequence of Germany’s public funding plan and protection plans. Spain can be one of many constructive factors of the euro zone. But potential development is simply too low and we see the hole that has opened when it comes to productiveness and manufacturing per capita with respect to the United States. And that could be a homegrown downside, it has nothing to do with exterior forces. This is what the Draghi and Letta reviews level out. The single market should be deepened, there are nonetheless many limitations that forestall integration and economies of scale will not be generated. The capital market union should play a task. The area as a complete has massive quantities of financial savings and present account surpluses, it’s saving greater than it invests. The query is: are these financial savings going to innovation? Do they fund future unicorns? If you take a look at the final 25 years, issues will not be going very effectively in that regard.

P. He highlights Spain as a constructive level on the European panorama, however there may be an inner debate about whether or not development is simply too intensive and unproductive.

R. There has, after all, been a contribution to development that comes from the rise within the workforce, largely because of the arrival of foreigners, however one other half that can be because of the employment fee, which has tended to be fairly low in relation to different international locations. We do not simply see intensive development. In the final two or three years there was a rise in productiveness and a few convergence with respect to different European economies. These parts ought to clearly be favored and extra must be invested in them.

P. And what are your projections relating to these variables in Spain?

R. The contribution of the rise within the workforce and tourism to development, which have been necessary drivers, will reasonable. We count on a slowdown in GDP in 2027, from 2.3% this yr, to 1.9%. Potential development stands at 1.7%, which is larger than in the remainder of the euro zone, though that proportion additionally displays comparatively constructive labor development, and extra will be completed.

P. We haven’t authorized new General Budgets for greater than two years. Do you see this as an issue for financial insurance policies?

R. The funds plans which have been proven to us, that are the identical as these shared with the European Commission, appear affordable when it comes to the fiscal consolidation that’s happening in Spain and different international locations. Maybe it could possibly be sped up somewhat, however the magnitudes appear right from our perspective.