Spain sees 2013 0.2% growth, balanced budget in 2016

27th April 2012, Comments 0 comments

The Spanish economy, deep in recession and with unemployment at a record high, should return to very modest growth next year and post a balanced budget by 2016, the government said Friday.

"For 2013, we are projecting slight growth" of 0.2 percent, Economy Minister Luis de Guindos said, with the government having forecast a contraction of 1.7 percent for this year.

De Guindos said the economy should then pick up to post growth of 1.4 percent in 2014 and then 1.8 percent in 2015.

Spain posted a public deficit -- the shortfall in revenues to spending -- equal to 8.5 percent of Gross Domestic Product last year, way above the 6.0 percent target and the EU ceiling of 3.0 percent.

After a series of biting and hugely unpopular austerity measures, the government aims to get the deficit down to 5.3 percent this year and 3.0 percent in 2013.

De Guindos said the deficit would fall further to 2.2 percent in 2014, 1.1 percent in 2015 and finally to be in balance by 2016.

The government expects unemployment to ease to 24.2 percent next year while data Friday showed the jobless rate jumping sharply to 24.4 percent in the first quarter of 2012 from 22.85 percent in the previous three months.

The jobless report adds to the pressure on the government to meet its targets and avoid having to seek an international debt bailout like its eurozone peers Greece, Ireland and Portugal.

Government spokeswoman Soraya Saenz said Friday that the country was "perhaps going through one of its most difficult periods on the economy.

"We are aware that this is a difficult time but if we all work together, we will get out of the crisis," Saenz said.

On Thursday, Standard & Poor's, one of the top three credit rating agencies, cut Spain's sovereign debt rating by two notches to BBB-plus, warning that the deficit situation was worsening and the banks may need more help.

"We believe that ... Spain's budget trajectory will likely deteriorate against a background of economic contraction in contrast with our previous projections," S&P said.

"At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector.

"As a consequence, we believe there are heightened risks that Spain's net general government debt could rise further."

© 2012 AFP

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