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Central bank posts grim 2013 forecast

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Central bank posts grim 2013 forecast
The head of Spain's central bank Luis María Linde takes his oath of office before King Juan Carlos and Queen Sofia in 2011. Photo: Angel Diaz/AFP
12:24 CET+01:00
Spain's central bank said on Tuesday the country's economy would shrink even more in 2013 than last year and that unemployment would continue to rise.

The Spanish central bank forecast on Tuesday that the eurozone's fourth biggest economy will contract even more this year than in 2012, but would then benefit from "a modest rebound in 2014".

The Bank of Spain estimated that business activity would shrink by 1.5 percent in 2013, on the heels of a 1.37 percent contraction last year, and then expand by 0.6 percent in 2014.

It also forecast that Spanish unemployment, among the eurozone's highest, would rise to 27.1 percent of the workforce by the end of this year, but would finish 2014 at 26.8 percent.

The bank said unemployment "would moderate substantially" next year and that there would be a net increase in jobs in the latter part of the year.

According to El Pais, the latest figures are a lot less positive than those provided by public institutions and are closer to those of private analysts.

The boss of Spain's central bank Luis María Linde also said the lender's jobs forecast was based on the fact that "laws passed last year would bring down salaries".

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