MADRID, April 12 (Reuters) - The International Monetary Fund raised its forecast for Spain's economic growth this year to 1.9% from 1.5% on Friday, citing the country's "strong resilience" amid a general weakening in the euro zone.
The IMF said the higher growth should be driven by increased domestic consumption, the effects of the European Union's post-pandemic recovery plan and an expected slowdown in inflation coupled with a relaxation of interest rates.
However, it added that private investment remained weak and consumption had only recently managed to recover the levels of late 2019, "indicating subdued domestic demand overall since the pandemic".
The IMF also reiterated its prior projection of 2.1% growth of the country's gross domestic product in 2025.
Last year, Spain's GDP expanded by 2.5%.
In March, the Bank of Spain also upped its 2024 GDP growth outlook to 1.9% from 1.6%.
Meanwhile, the Spanish government has said it sees GDP growing 2% this year.
The IMF's mission chief to Spain, Romain Duval, told reporters that risks were now more balanced than months ago, but added that political fragmentation could undermine the government's reform agenda.
Duval said the lack of affordable housing was one of the main structural problems that Spain needed to address. He recommended that Madrid scupper the rent controls imposed by the Catalonia region, which he described as "counterproductive", and instead boost housing supply rather than distort demand.
Reporting by Belén Carreño; Writing by David Latona; Editing by Andrei Khalip
