Which countries will grow more than Spain between now and 2030?

This year's spring brings mixed news. On the one hand, economic growth is expected to remain stable in the short term as prices moderate. However, unless there are major technological advances or major structural reforms, in the long term the global Gross Domestic Product (GDP) will end the decade below the historical average. This is one of the conclusions drawn from the latest report published by the International Monetary Fund (IMF) on the global economic outlook.

Specifically, it is expected that in the next two years the GDP will turn around 3.2% and the average general inflation will decrease to 2.8% at the end of this year to reach 2.4% at the end of 2025. This disproves any idea that the world is going to fall into a recession due to geopolitical conflicts. On the contrary, it seems that it has overcome, against all odds, the successive conflicts that have been occurring since the interruptions in the supply chain as a result of the pandemic. Large economies have proven resilient to the energy and food crisis caused by the war in Russia and Ukraine, as well as rising inflation. Emerging markets have also avoided catastrophe, although the gap between rich and poor is widening.

The bad news is that, in the face of all these obstacles, the long-term outlook has deteriorated. Global growth will slow and fall well below the historical average of 3.8%. According to the forecasts of the Washington-based organization, it will barely reach 2.8% at the end of 2029. This drop threatens to reverse the improvements of the previous decade in living standards, particularly in the poorest regions, and could condition debt sustainability. Trade will also remain below its average annual rate – from 4.9% between 2000 and 2019, to 3.2% in 2029 – with the risk of worsening due to the strong headwinds of geoeconomic fragmentation. and unilateral trade and industrial policies.

The countries that will grow the most in the next seven years will be those that are developing, with Guyana in the lead, which will double its GDP level in 2029 compared to a year ago, according to the Fund's projections. For decades, this former British colony has gone unnoticed by everyone; Until 2015 it was the second poorest country in South America, but now its economy is at cruising speed thanks to all the oil fields that have been discovered. It is followed by two African nations and one Asian nation: Mozambique, Rwanda and Bangladesh. In all three, the GDP will rebound around 50 percentage points compared to 2023. Although the names at the top of the list may seem contradictory to the long-term economic outlook, in reality they are not. In fact, developing economies tend to grow at a faster rate than major powers.

In part, this dynamic is what explains why some of the advanced economies barely have a variation in the remainder of the decade. Italy will barely grow three percentage points if last year is taken as a base, while Japan's rebound will be four points. Germany, the great engine of Europe, will not stand out for its great progress either, but it will be enough to easily avoid any prediction of recession. Spain will perform much better than its neighbors, according to these IMF projections. In the remainder of the decade, the country will grow eleven percentage points, which will allow it to continue reducing its foreign debt without neglecting investment. Even so, globally it occupies 158th position out of 187 countries analyzed. The projections take the GDP of each economy in 2023 as a base of 100 and from there add up all the growth that the IMF foresees until 2029.

Trade, at risk

The organization led by Kristalina Georgieva details that since the war in Ukraine, in February 2022, fractures are occurring in trade patterns that could end up deteriorating global growth. Flows between geopolitical blocs have greatly decreased compared to the exchange within each region. These moves come amid growing limitations on cross-border trade. The latest data from the organization Global Trade Alert shows this: between 2022 and 2023 there have been some 6,200 new restrictions, affecting supply chains.

Although this trend threatens to prevent growth in the medium term, there are another series of policies that could counteract the problem. Among the drivers of the economy that the Fund considers include labor and improved productivity, although this requires investing in technology. Their analysis suggests that measures focused on improving competition, trade openness, financial access and labor market flexibility could boost global growth by about 1.2 percentage points by 2030.

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