MADRID (AP) — Spain's economic recovery will gather pace this year but unemployment is set to remain above 20 percent until 2017, according to government predictions Wednesday.
Economy Minister Luis de Guindos said Spain's economy should grow by 1.2 percent in 2014 and 1.8 percent in 2015 as the country recovers from a double-dip recession that ended late last year and destroyed millions of jobs. The growth figures were upwardly revised from the previous predictions of 0.7 percent and 1.5 percent.
De Guindos said the government hoped to reduce the unemployment rate from 26.1 percent at the close of 2013 to 24.9 percent this year, and 23.3 percent in 2015. However, it won't be until 2017 before unemployment falls below the 20 percent threshold.
Spain's economy, like others that have the euro as their currency, has suffered as the government imposed harsh austerity measures in order to get its public finances into shape. The country's Finance Minister Cristobal Montoro said the government was now aiming to achieve a 2014 budget deficit worth 5.5 percent of Spain's annual gross domestic product, down from a previously forecast 5.8 percent.
Predictions for the following years were left unchanged at 4.2 percent in 2015 and 2.8 percent in 2016 — just below the eurozone ceiling of 3 percent.
Spain's economy began to crumble in 2008 with the collapse of its bloated real-estate sector. Government spending cuts and tax increases as well as wide-ranging economic reforms has helped restore investor confidence and the country's borrowing costs have dropped from perilously high levels in 2012 to pre-crisis rates.
The government forecasts came on the day the National Statistics Institute said the economy grew at its fastest rate in six years in the first quarter. It said the economy expanded by 0.4 percent January through March, the best quarter since the first three-month period of 2008, when the economy grew by 0.5 percent.
The first quarter rate was double that of the previous three-month period.
Compared with a year earlier, the economy grew by 0.6 percent in the quarter, the first annual growth figure after nine quarters of contraction.