Spain cuts 2011 growth forecastNovember 17th, 2011 - 12:14 pm ICT by IANS
Madrid, Nov 17 (IANS/EFE) Spain’s economy is likely to grow by 0.8 percent in 2011, the government said Wednesday, revising downward its earlier forecast of a 1.3 percent expansion in gross domestic product.
The secretary of state for the economy, Jose Manuel Campa, offered the new projection at a press conference that followed the release of data confirming that the Spanish economy stalled in the third quarter due to lower spending by national and regional governments amid sovereign debt concerns.
The figure cited Wednesday by Campa is more in line with projections of the European Commission, which last week lowered its economic growth forecast for Spain for 2011 and 2012 to 0.7 percent.
The commission had previously predicted Spain would grow at a 1.5 percent clip next year.
Campa said the strong performance of the foreign sector remained a key pillar of the Spanish economy, noting that year-on-year growth in exports in the third quarter helped offset a decline in domestic demand.
The secretary noted that Spain posted a third-quarter trade surplus of 2.63 billion euros ($3.5 billion).
Referring to Spain’s long-running employment woes, Campa said the data released Wednesday shows that companies are not hiring new workers and prefer to have their current employees work longer hours.
Nearly 5 million people are unemployed in Spain, according to the latest workforce survey, which showed the jobless rate was 21.52 percent overall and 45 percent for those under the age of 25.
Campa said the government’s fiscal consolidation efforts, particularly its plan to reduce a high budget deficit, had placed the country’s economy on the right track.
Regarding the country’s “priority and unconditional” objective of reducing the deficit to 6 percent of GDP by year’s end, he said the national government will do its part but that the regional administrations also must assume their responsibilities.
The effects of the global recession were aggravated in Spain by the collapse of a long construction and property boom that made the country’s economy the envy of most of Madrid’s European partners.
The government’s lower growth forecast for this year comes just four days before general elections.
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