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Spain cuts 2011 growth forecast

Nearly 5 million people are unemployed in Spain, according to the latest workforce survey, which showed the jobless rate was 21.52 per cent overall and 45 per cent for those under 25 years.

twitter-logo IANS   Madrid     Last Updated: December 5, 2011  | 10:36 IST

Spain's economy is likely to grow by 0.8 per cent in 2011, the government said on Wednesday, revising downward its earlier forecast of a 1.3 per cent expansion in gross domestic product.

The secretary of state for the economy, Jose Manuel Campa, offered the new projection at a press conference that followed the release of data confirming that the Spanish economy stalled in the third quarter due to lower spending by national and regional governments amid sovereign debt concerns.

The figure cited on Wednesday by Campa is more in line with projections of the European Commission, which last week lowered its economic growth forecast for Spain for 2011 and 2012 to 0.7 per cent.

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The commission had previously predicted Spain would grow at a 1.5 per cent clip next year.

Campa said the strong performance of the foreign sector remained a key pillar of the Spanish economy, noting that year-on-year growth in exports in the third quarter helped offset a decline in domestic demand.

The secretary noted that Spain posted a third-quarter trade surplus of 2.63 billion euros ($3.5 billion).

Referring to Spain's long-running employment woes, Campa said the data released on Wednesday shows that companies are not hiring new workers and prefer to have their current employees work longer hours.

Nearly 5 million people are unemployed in Spain, according to the latest workforce survey, which showed the jobless rate was 21.52 per cent overall and 45 per cent for those under the age of 25.

Campa said the government's fiscal consolidation efforts, particularly its plan to reduce a high budget deficit, had placed the country's economy on the right track.

Regarding the country's "priority and unconditional" objective of reducing the deficit to 6 per cent of GDP by year's end, he said the national government will do its part but that the regional administrations also must assume their responsibilities.

The effects of the global recession were aggravated in Spain by the collapse of a long construction and property boom that made the country's economy the envy of most of Madrid's European partners.

The government's lower growth forecast for this year comes just four days before general elections.

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