Spain still sees 'positive growth' in second half: minister

5th October 2011, Comments 0 comments

Spain's Finance Minister Elena Salgado rejected Wednesday forecasts that her country will fall back into recession, saying the government stuck by its forecast of growth during the second half.

"We predict positive growth in both the third and the fourth quarter," she said during an interview with radio Onda Cero.

Goldman Sachs on Tuesday forecast that the Spanish economy would shrink by 0.4 percent next year after expanding 0.7 percent this year.

Citibank predicts the Spanish economy will shrink by 0.7 percent in 2012 after expanding 0.6 percent this year.

The Spanish government is forecasting economic growth of 1.3 percent year on year in 2011, but the consensus among economists is closer to 0.8 percent, which would be harder for the government to meet targets for a reduced budget deficit.

Salgado acknowledged that the economy was slowing down and said "if the government redid its forecasts today, they would of course be different from the ones we did in the summer".

But she refused to issue a new growth forecast.

The Spanish economy slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of a property bubble. It stabilised in 2010 but growth remains anaemic.

Economic output grew 0.2 percent in the second quarter from the previous three months, after a revised 0.4-percent expansion in the first quarter.

Unlike France, Italy and Portugal, Spain has not revised its growth forecast for 2011.

The number of people claiming unemployment benefits in Spain rose for the second straight month in September in what was seen as a sign by economists that the economy is slowing down.

The number of jobless rose from the previous month by 95,817 people, or 2.32 percent, to 4.23 million in September, the labour ministry said Tuesday.

That follows a 1.25 percent rise in September that put an end to four straight months of declines.

© 2011 AFP

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