`Spanish economy contracting’December 27th, 2011 - 12:06 pm ICT by IANS
Madrid, Dec 27 (IANS/EFE) Spain’s new economy minister said Monday that the nation’s economy will post negative growth in the fourth quarter of this year and the first three months of 2012.
Luis de Guindos, a former investment banker, did not use the word “recession”, but the condition he described matches the technical definition of the term: two consecutive quarters of contraction.
The October-December and January-March periods “will not be easy for growth or employment”, the minister said during the swearing-in ceremony for two of his top aides.
He added, however, that the difficult situation will be “a spur” to needed reforms, including the “vital and indispensable” overhaul of the financial sector and elimination of red tape and bureaucracy in the market for goods and services.
Another priority for the Economy Ministry is fostering the rapid integration of scientific and technological advances to create a more sustainable growth model, De Guindos said.
Regarding the problems of the eurozone, he said much would be at stake in the next few months and expressed confidence that Spain, the zone’s No. 4 economy, will play a relevant role in decision-making and in the implementation of reforms.
The administration of Prime Minister Mariano Rajoy, which took office last week, will decide Friday on an initial set of measures to deal with the economic crisis, Deputy Premier Soraya Saenz de Santamaria said a few hours before De Guindos’ comments.
Rajoy, whose conservative Popular Party won massively over the incumbent Socialists in the Nov 20 general elections, said Spain needs to cut its budget deficit by 16.5 billion euros ($21.4 billion) in 2012 to keep it within the ceiling of 4.4 percent of gross domestic product.
Except for pensions, which he promised to raise after a freeze imposed by the previous government, every other category of spending will be scrutinized with an eye toward cuts, Rajoy said.
The new administration also aims to halt the spiral of job destruction that has left more than 21 percent of the workforce - 5 million people - unemployed.
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Tags: budget deficit, consecutive quarters, de santamaria, economic crisis, economy minister, economy ministry, eurozone, financial sector, first three months, general elections, growth model, initial set, investment banker, mariano rajoy, new administration, new economy, rapid integration, relevant role, spanish economy, swearing in ceremony