Worst of Spain's recession probably over

18th June 2009, Comments 0 comments

Spain's deepest ever recession has passed its worst point, but the high level of unemployment will continue to grow.

Madrid – Spain's deepest ever recession has probably passed its worst point, but the high level of unemployment will continue to grow, the governor of the Bank of Spain said Tuesday.

"It is probable that the worst point of contraction of activity has passed," Miguel Angel Fernandez Ordonez said in a speech presenting the annual report for 2008.

"The fall in activity in 2010 will be less pronounced," a forecast that reflects the view of the Socialist government that the worst of the crisis is over."

However "the unemployment rate will continue its upwards trend," he said.

And he warned of dangers to growth caused by the soaring unemployment.

"There exists the risk that the sharp increase in unemployment is very lasting, and that that will slow the recovery," he said.

He also appealed for an easing of labour market regulations "or there is the risk that even after the critical moment of the crisis it continues to damage the possibilities for recovery of the economy."

Spain's economy, Europe's fifth largest, has been hit particularly hard by the world economic crisis after a decade-long boom driven by the construction industry came to an end.

The government on Friday more than doubled its estimate of contraction in the economy this year to 3.6 percent from 1.6 percent forecast previously.

It predicted the economy would shrink by 0.3 percent next year, recovering to growth of 1.8 percent in 2011 and 2.7 percent in 2012.

The crisis has also pushed up unemployment, which hit 17.36 percent in the first quarter, more than double the average for the European Union.

AFP / Expatica

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