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Spain jobless rate may rise to 23 per cent: OECD

The Organization for Economic Cooperation and Development (OECD) said the Spanish economy will end this year with 0.7 per cent growth before slipping back into recession in 2012.

IANS | November 29, 2011 | Updated 11:37 IST

Spain's unemployment rate could climb to 23 per cent next year, the Organization for Economic Cooperation and Development said Monday in its latest global Economic Outlook.

The Paris-based body of 34 mainly developed nations predicts that the Spanish economy will end this year with 0.7 per cent growth before slipping back into recession in 2012 with a 0.3 per cent reduction in gross domestic product (GDP).

Unemployment in Spain, already at 21.5 per cent, will rise to 23 per cent next year then slowly begin to decline in 2013, the OECD said.

The prediction for the country's economic evolution derives in part from the reduction in public employment at all levels of the administration to comply with the objectives of reducing Spain's public debt to 3 per cent by 2013, a goal the OECD expects to be met.

The authors of the OECD report expect a tentative recovery of Spanish GDP of 1.3 per cent in 2013.

OECD issues stark warning on global economy

The Spanish economy stalled in the third quarter and economic activity could be declining in the October-December period as increasing pressure on Spain's sovereign debt begins to impact the private sector and bringing about a worsening in financing conditions.

The continued downward slide in housing prices is affecting the account statements of the banks, particularly the ones exposed to the real estate sector and the outlook for company exports has worsened in light of the global slowdown, in particular in the Eurozone.

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