MADRID: Spain predicted yesterday a faster-than-expected economic recovery and net job growth in 2014 as it emerges from five years of stop-start recession with a 26-percent unemployment rate.
Economy Minister Luis de Guindos said Spain’s battered economy would generate jobs growth next year, a first since a decade-long property bubble imploded in 2008, ushering in a double-dip recession.
“In 2014, the Spanish economy will not only grow — growth in the order of one percent is expected — but Spain will also create net jobs,” De Guindos told a conference in Brussels. De Guindos said he expected the eurozone’s fourth-largest economy to expand by about 1.0 percent in 2014, compared to an official growth forecast of 0.7 percent.
An official revision will not be released until late April, he said.
Analysts say the big question remains whether the economy will be strong enough to create jobs for many of the 5.9 million people unemployed in the last quarter of 2013, equal to more than 26 percent of the workforce.
Spain’s economy crawled out of recession with 0.1-percent growth in the third quarter of 2013.
But both the government and the Bank of Spain estimate that growth picked up to a better-than-expected 0.3-percent pace in the final quarter, leading to the upward revision for 2014.
Prime Minister Mariano Rajoy’s conservative government credits its tough economic reforms and austerity policies for pulling Spain back from the precipice of a full-blown bailout, widely feared in mid-2012.
“Two years ago we were on the brink of collapse but thanks to the difficult measures we took internally, the situation is now totally different,” De Guindos said. “We are beginning to see the results,” he boasted ahead of a meeting of European Union finance ministers.
Beside slashing spending to rein in Spain’s yawning public deficits, the government reformed the labour market in 2012 by cutting dismissal costs and making it easier to change work conditions.
Raj Badiani, Britain-based senior economist for research house IHS Global Insight, said the Spanish government’s 2014 growth revision was probably justified.
But even if the economy grows by 1.0 or 1.5 percent in 2014, it still faces formidable structural problems, he said, citing a lack of jobs growth, falling house prices, bad loans in Spanish banks, rising public debt and an austerity squeeze.
“A recovery with growth of 1.0 percent with no employment is really not a spectacular result,” Badiani said in an interview, warning that even Spain’s encouraging export performance could suffer if emerging economies stumble.
AFP
