• Spain's news in English

Central bank offers brighter outlook for Spain

AFP · 27 Mar 2014, 09:15

Published: 27 Mar 2014 09:15 GMT+01:00

Facebook Twitter Google+ reddit

Both countries are poised to see their economies grow by 1.2 percent this year, the banks forecast in separate reports.

In Spain, the eurozone's fourth-largest economy, the central bank said it expected a gradual, modest recovery ahead but warned that unemployment rates would remain stubbornly high.

Following a 1.2-percent contraction last year, the central bank said it was tipping gross domestic product growth of 1.2 percent this year and 1.7 percent in 2015.

If correct, that would mean Spain is set for the fastest economic growth since 2007, just before a property crash plunged the nation into five years of stop-start recession, wiping out millions of jobs and plunging the nation's banks, companies and consumers deep into debt.

Growth would not be strong enough, however, to make a big dent in the unemployment rate, which topped 26 percent at the end of 2013.

The Bank of Spain predicts the unemployment rate will ease to 25.0 percent this year and 23.8 percent in 2015.

Prime Minister Mariano Rajoy's conservative government has issued slightly less optimistic economic forecasts, predicting growth of 1.0 percent in 2014 and 1.5 percent in 2015.

- Hiking forecasts -

In another sign that countries on the periphery of the eurozone are slowly getting back on their feet, the Portuguese central bank sharply hiked its forecasts for growth.

The bank said that growth in the bailed-out country was set to be 1.2 percent this year instead of 0.8 percent estimated previously.

The upgrade came at a critical moment for Portugal which is preparing to emerge from its bailout programme on May 17 and to return to financing itself with loans from the sovereign bond market.

Portugal has been regaining the confidence of financial markets and the interest rate it has to offer to attract 10-year loans has fallen to below 4.2 percent, the lowest rate since March 2010.

The central bank said that growth next year would rise further to 1.4 percent compared with a forecast in December of 1.3 percent.

In 2016, the economy would grow by 1.7 percent, the central bank said in its spring report, with growth driven by household spending and exports.

However, as in Spain, the impact on the job market in Portugal would be gradual, it warned.

The International Monetary Fund and European Union rescued Portugal from the threat of bankruptcy in May 2011 with loans of 78 billion euros ($108 billion).

Story continues below…

But this help was tied to a programme of tough structural reforms which weighed heavily on economic activity and household spending.

In common with other bailed-out eurozone countries -- notably Greece and Ireland -- Portugal is working not only to correct its public finances but also to raise efficiency in a bid to achieve an export-led recovery.

Ireland is achieving this, and Greece has also made progress.

The government in Ireland predicts that the economy will recover well this year and Greece last year posted its first current account surplus since 1948.

Don't miss stories about Spain, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Recipe: How to make fabada - traditional Asturian bean stew
Photo: Flavio Lorenzo Sánchez/Flickr

The hearty Asturian dish is a perfect lunch on a cold day... and don't forget the crusty bread and cider!

Brit 'paedo' held on Costa del Sol after Most Wanted appeal

One of Britain's most wanted fugitives was arrested on the Costa Del Sol following a tip-off from an expat just hours after his face appeared on a public appeal.

Spain's parliament approves deficit reduction measures
Photo: Images Money/Flickr

Spanish lawmakers approved on Thursday measures to reduce the public deficit and keep it under the target agreed with the European Union.

'Cubism and War' show opens at Barcelona Picasso Museum
Pablo Picasso Harlequin and Woman with a Necklace. Photo: MP

Barcelona's Picasso Museum unveiled an exhibition on "Cubism and War" on Thursday depicting how one of the most influential artistic styles of the 20th century survived the First World War.

Why this bionic limb pioneer doesn't believe in disability
Hugh Herr has been award Spain's top science prize. Photo: FPA

The Local speaks to Hugh Herr on winning Spain's top science prize and how being an amputee doesn't make him disabled.

Dine in the buff at Spain's first nudist restaurant
A buffet of organic food will be served on "human tables". Photo: Innato / Facebook

Spain's first naked dining experience is to arrive on the island of Tenerife following the success of a similar venture in London.

Spain's top court overturns bullfighting ban in Catalonia
Photo: AFP

Spain's Constitutional Court on Thursday cancelled a bullfighting ban in Catalonia in what is likely to exacerbate tensions between Madrid and the separatist region, and between animal activists and fans of the tradition.

Out of the dark: Five years on from Eta ceasefire
Eta members made a ceasefire declaration in January, 2011. Photo: Gara / AFP

Five years after armed separatist group Eta declared a permanent ceasefire, Basque journalist Alberto Letona is still wondering when the dialogue will begin.

Hunt for ten most wanted Brit fugitives hiding out in Spain
Call Crimestoppers if you recognize these faces.

These fugitives from British justice are thought to be hiding out in Spain. Do you recognize anyone?

Eta 'not dead' but Spain focus moves onto jihadism
Archive photo of a pro-mural in the Basque Country. Photo: AFP

Five years after Eta quit violence, the Basque separatist group has yet to dissolve but it poses little threat and authorities have shifted their focus to fight jihadists, says Spain's chief anti-terrorism prosecutor.

Sponsored Article
How to vote absentee from abroad in the US elections
Celebrate expat life at Madrid’s THRIVE convention
Sponsored Article
Last chance to vote absentee in the US elections
Disney announces plans for Don Quixote action movie
Activist tells 8-yr-old matador wannabe with cancer 'just die'
Sponsored Article
How to vote absentee from abroad in the US elections
King to make last minute push to avoid third vote in Spain
Amazing photos of Catalonia's 'human tower' contest
What's on in Spain: October 2016
'No way, Jose! You'll never get your hands on our Rock'
Recipe: How to make a classic Spanish tortilla de patatas
Chorizo in paella? Go back to cooking school Jamie Oliver
Spain in eye of a perfect storm after 10 months without govt
Thousands share clips of life for 'Spain in a Day' film
Ten incredible Spain locations for Game of Thrones season 7
Analysis & Opinion
Why moving to Spain could be the best decision of your life
Seven reasons why autumn is the very best season in Spain
Spanish study finds four types of personality. Which are you?
New search underway for civil war grave of poet Lorca
Bison found decapitated on Valencia nature reserve
Forgotten Voices: What Brits in Spain think about Brexit
One dead and 14 injured in blast at Spanish resort
Game of Thrones want extras 'with muscles' to film in Spain
Thousands march in Madrid to push for bullfighting ban
Spanish team invents hands-free 'penis bidet'
In pics: Devastation caused by Costa Blanca wildfires
jobs available