Spain Exits Recession, But Not Yet Out Of Crisis: PM
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Spain will see economic growth of between 0.1-0.2 percent during the third quarter of 2013, said Prime Minister Mariano Rajoy on Monday, though he warned that a great deal of work would still need to be done before the economy can get back on track.
Spain will see economic growth of between 0.1-0.2 percent during the third quarter of 2013, said Prime Minister Mariano Rajoy on Monday, though he warned that a great deal of work would still need to be done before the economy can get back on track.
In an interview with the Wall Street Journal, Rajoy forecasted growth of between 0.5 and 1.0 percent next year; however the government would still need to implement more austerity measures in order to consolidate budgetary and structural overhauls.
[quote]”Spain is out of recession but not out of the crisis,” the Spanish Prime Minister. “The task now is to achieve a vigorous recovery that allows us to create jobs.”[/quote]The unemployment rate in Spain is expected to rise to at 27.1 percent in June, before dropping to 26.7 percent in 2014. Unemployment dropped to 26.2 percent in the second quarter of this year thanks to summer hirings, according to AFP.
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Though the Prime Minister said that the austerity measures were working and “things are on a good path”, he acknowledged that the real recovery would only come when Spaniards start spending more, house prices bottom out, and the country’s external debt stabilised.
“If you ask me today, I would say that Spain won’t need to extend the [bailout program] into 2014,” he told WSJ.
Calling on voters to be patient on the eventual recovery, Rajoy also admitted that the government’s austerity program was hurting his popularity, but insisted that he was taking the right steps to create “a solid base for the future.”
[quote]”If people see that what we have done is producing results, and also see that what has been done is creating a solid base for the future, I think we are in condition to recover,” he said. “But you can’t govern a country thinking every day whether or not they’re going to vote for you.”[/quote]Rajoy’s comment echoed the overall optimism that other EU policymakers have recently voiced, believing that recovery is round the corner. Borrowing costs for Spain and the rest of the troubled eurozone have plunged over the past year, while 17-nation bloc as a whole registered a tepid return to growth in the second quarter of this year.
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Labour costs have been cut, exports are on the rise, and the current-account deficit, once 10 percent of GDP, has now turned to surplus, said Rajoy.
On Tuesday, the Spanish government also raised its economic forecast for next year from 0.5 percent to 0.7 percent, during a budget approval debate in parliament.
[quote]”I won’t dare to speculate,” said Rajoy, when asked how long it would take to reduce Spain’s unemployment rate; but added, “the improvements will happen little by little.”[/quote]
