Spain's economic growth could fall lower

4th June 2008, Comments 0 comments

The government, which revised its forecast in April from 3.1 percent to 2.3 percent, is now saying that it could stand around 2 percent.

4 June 2008

MADRID - The number of people unemployed continued to rise sharply in May as the Socialist government indicated Tuesday economic growth this year could come in below its recently revised forecast.

According to figures released on Wednesday by the Labour Ministry, the number of registered unemployed climbed by over 15,000 to 2.353 million. The ministry said that was the first time the number of jobless had risen in May since it began compiling the current series of figures. Jobless claims have risen 19.2 percent since May 2007.

The construction sector felt the brunt of the downturn due to a slump in homebuilding. The number of jobless in the industry rose by 4.6 percent or 15,491 in May from April. The number of people looking for work dropped in the services sector but increased in industry.

Popular Party described the figure as "alarming" and accused the government of complacency.

"This is the worst figure for May" since 1979, the PP's congressional spokeswoman, Soraya Sáenz de Santamaría, said.

Prime Minister José Luis Zapatero argued that the unemployment rate is at its lowest levels since democracy was restored in Spain in the late-1970s.

According to figures released in April by the National Statistics Institute, the unemployment rate jumped to 9.6 percent in the first three months of 2008 from 8.6 percent in the previous quarter.

That was the biggest jump since the first quarter of 1993, when the Spanish economy slipped into recession.

Meanwhile, Economy Minister Pedro Solbes said GDP growth of 2008 could fall short of the government's target of 2.3 percent. The government revised its forecast in April from 3.1 percent previously.

"We believe growth at the end of the year could stand at around 2 percent," Solbes said in an interview with state-run radio station RNE.

Solbes said inflation was now likely to end this year at 3.5 percent because of the surge in oil prices, up from a previous estimate of 3.0 percent.

Standard & Poor's on Tuesday predicted Spain's GDP growth would slow this year to 1.8 percent from 3.8 percent in 2007 and to 1.6 percent in 2009.

The secretary of state for the economy, David Vegara, on Tuesday warned of difficult times ahead, as increased turmoil in the financial markets pushes borrowing costs higher, causing the correction in economic activity to intensify.

[El Pais / Adrián Soto / Expatica]

0 Comments To This Article