Spain's economy showing signs of recovery: PM

28th April 2010, Comments 0 comments

Spain's prime minister said Wednesday the economy was showing signs of recovery despite high unemployment and growing doubts about the government's ability to cut its public deficit.

"There are signs showing that our economy is improving -- that we are starting to put the recession behind us and that it is likely that in the first quarter, we would already be posting positive growth," Prime Minister Jose Luis Rodriguez Zapatero told parliament.

The Spanish leader pointed to a growth of 0.8 percent in tax intake for the first quarter, the highest in two years, which he said could help to cut the country's public deficit.

He also cited a recovery in car sales, increase in electricity consumption and housing transactions as indicators pointing to recovery.

While unemployment among Spain's active population reached 20.05 percent, Zapatero said that the number of jobless had peaked.

"According to government forecasts, unemployment has reached its highest level in the first quarter and that we will have a drop of this rate," said the socialist leader.

The unemployment data, published Monday by mistake by the National Institute of Statistics, indicate that Spain's unemployment rate climbed to a record high in the European Union and among developed countries.

Spain has been in recession since the end of 2008 and its public deficit soared to 11.2 percent of gross domestic product in 2009, nearly four times the limit allowed for eurozone countries.

The government, which forecast that its GDP would shrink slightly by 0.3 percent in 2010, is trying to implement cost-cutting measures in a bid to rein in its public deficit to three percent of GDP by 2013.

But as panic mounts over the ability of Greece to repay its debt, and after ratings agency Standard's & Poor's downgraded Portugal's credit rating, investors are questioning the capacity of Spain to deal with its deficit.

Madrid's stock market fell 2.6 percent in early trading, after closing down 4.0 percent Tuesday.

© 2010 AFP

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