Spain admits economic recovery will be slow

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Spain's finance minister admitted Sunday that the country's economic recovery would be slow due to the government's austerity drive.

"The austerity measures and spending cuts will have an effect on growth," Elena Salgado said in an interview with the daily El Pais, adding that it was unlikely there would be a significant increase in employment in 2010.

Financial restructuring and the approval of the proposed labour market reforms would first be necessary to establish the foundations for a potential return to growth, Salgado said.

"We know that initially it will be slow but the recovery will gain momentum from next year," she said.

The cabinet on Wednesday is to approve the labour market reforms, aimed at curbing an unemployment rate that has soared to more than 20 percent, the second highest in the European Union after Latvia.

The International Monetary Fund recently said Spain's labour market was too rigid and the system needed to be reformed urgently.

The Spanish economy entered recession at the end of 2008 as the global financial crisis accelerated a collapse of its once-booming property sector. It only emerged with tepid 0.1 percent growth in the first quarter this year.

Parliament last month passed by just one vote the government's 15-billion-euro (18-billion-dollar) austerity package, which includes cuts to public workers' salaries.

© 2010 AFP

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