Unemployment in Spain expected to shoot up

1st August 2008, Comments 0 comments

Leading Spanish bank BBVA on Thursday predicted unemployment would soar to 14 percent by end 2009.

1 August 2008

MADRID - Thursday was another black day for Spain's ailing economy.

Leading Spanish bank BBVA on Thursday predicted that unemployment would surge to 14 percent by the end of 2009 as activity deteriorates rapidly, while inflation soared to its highest level since 1997.

"The financial crisis, falls in the stock markets, the increase in oil prices and the correction in the real estate sector are feeding off  each other, adding to a particularly adverse scenario for Spain's economic growth forecast," the highly-respected research department of Spain's second-biggest bank said in its latest quarterly report on the domestic economy.

BBVA also cut its GDP growth forecast for this year and the next to 1.5 percent and 0.5 percent, respectively, and did not rule out zero growth in 2009.

The government recently slashed its estimates for 2008 to 1.6 percent and to 1.0 percent in 2009. It expects the jobless rate to rise to 12.5 percent.

Meanwhile, the National Statistics Office estimated the surge in oil prices caused inflation to accelerate from 5.1 percent in May to 5.3 percent in June.

To add to the country's woes, the current account deficit widened by 14.7 percent in the first five months of the year to EUR 50.114 billion as oil imports caused a blowout in the trade gap.

[El Pais / Adrián Soto / Expatica]

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