Spain's conservative government raised its growth forecast on Thursday for both this year and next, as official data showed registered unemployment fell for the fifth straight month in June. Prime Minister Mariano Rajoy said his government, which is facing a year-end general election, now sees growth of 3.3 percent in 2015 and of three percent in 2016. The government had earlier this year hiked its economic growth forecast to 2.9 percent for 2015 and 2016.
"We are growing because we are producing and exporting, unlike what happened before when we went into debt to buy what others produced," he said during a speech at an economic forum. Spain officially exited recession in late 2013 and the economy grew by 1.4 percent last year as consumer spending and investment improved and exports rose.
That was its first full year of growth since a property bubble burst in 2008, initiating a financial crisis that led to millions of people being left without work. The number of registered unemployed fell in Spain for the fifth straight month in June, dropping by 94,277 to 4.12 million, the labour ministry said in a statement. The jobless fell across all sectors except for agriculture and in every region, although the majority of new jobs were on short-term contracts.
June is traditionally a key period for hiring in Spain, as the services sector expands its workforce to deal with the surge in summer tourists. But while the number of jobless claims has been falling, Spain continued to battle one of the highest unemployment rates in Europe. The labour ministry's monthly figure is a different measure from the quarterly unemployment rate, which is based on surveys, and stood at 23.78 percent in the first quarter according to the National Statistic Institute. Within the eurozone only Greece had a higher jobless rate of 25.6 percent in March, the latest data available.
The International Labour Organisation expects Spain's jobless level - which hit a low of 8.6 percent in 2007 at the hight of the property boom - to remain above 20 percent until the end of the decade. Rajoy said that if, as the government expects, one million jobs are created during the last two years of his four-year term in office - 2014 and 2015 - "our ambition should be to create two million jobs during the next term."
He also confirmed that Spain's public deficit was on track to fall below the limit of three percent of its economic output required by nations using the euro single currency. The government has tabled a public deficit of 2.8 percent of economic output for 2016, but it is expected to revise its forecast when it presents a budget for next year. The prime minister also announced that an income tax cut that was to be carried out at the end of the year had come into effect on Wednesday. "This will imply supplementary revenues for taxpayers of 1.5 billion euros this year," he said. The government's new forecasts are more optimistic than those from Bank of Spain, which sees the economy expanding by 3.1 percent in 2015 and 2.7 percent in 2016.
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