IMF issues warning on Spain’s economy

Istanbul – The International Monetary Fund on Saturday warned Spain faces trouble ahead because of high fiscal deficits, low competitiveness and rising unemployment as its recession drags on into 2010.

"We expect some fairly tight conditions to prevail in Spain for some time," Ajai Chopra, deputy head of the IMF’s European department, told reporters in Istanbul ahead of IMF and World Bank annual meetings in Istanbul next week.

Jobless numbers in Spain rose in September for the second month in a row to 3.709 million. The government has said the unemployment rate will remain high, closing the year at 17.9 percent and rising to 18.9 percent in 2010.

The IMF on Thursday forecast that Spain’s economy will shrink by 0.7 percent next year even as most developed economies emerge from recession.

Marek Belka, head of the IMF’s European department, said the lack of restructuring in Spain "weighs down on the robustness of the rebound."

AFP/Expatica