Minister says Spain will fall back into recession
MADRID – Spain will slide back into recession early next year with the current quarter and the first of 2012 both registering negative growth, new Economy Minister Luis de Guindos said Monday.
De Guindos said he expects the economy – the eurozone’s fourth largest – to contract by between 0.2 percent and 0.3 percent on the previous quarter in the final three months of this year and again in the first quarter of next year. He said the outlook for next year was poor.
If the Spanish economy were to contract by between 0.2 percent and 0.3 percent for an entire year, it would shrink roughly 1 percent.
“Let nobody be fooled, the next two quarters are not going to be easy either in terms of growth or employment,” de Guindos said.
Spain began to emerge from a near two-year recession last year. It had two successive quarters of growth in 2011 before posting zero growth in the third period.
De Guindos took office last week as part of the new conservative Popular Party government. He said then he was confident the country would emerge from its severe economic crisis and return to prosperity and its former status as a job creator.
Spain has the highest unemployment rate of the 17 countries that use the euro, with 21.5 percent joblessness, and is running a swollen budget deficit following the recession that started with the collapse of a real estate bubble.
The Popular Party won a landslide victory in Nov. 20 elections on a promise to get the economy moving again.
Prime Minister Mariano Rajoy has pledged austerity cuts totaling 16.5 billion eurosand promised labor reforms.
His government is to begin approving urgent measures Friday, including a freeze on filling new civil service vacancies except in key areas such as the security forces.
Spain has already made sharp cuts to its national spending and introduced several reforms under the former Socialist government, but the economy has failed to respond.
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