World Economy

Spain Improves Debt Outlook

Spain Improves Debt OutlookSpain Improves Debt Outlook

The Spanish government lowered its 2015 forecasts for unemployment and public debt, bolstering its claims of a surging economic recovery months ahead of a general election.  

The economy ministry said the Spanish economy would create more than 600,000 jobs this year and start to chip away from next year at its debt mountain, NewsNow reported.

It said the overall jobless rate in 2015 would be 21.1%, one percentage point lower than its previous forecast, but still painfully high for ordinary Spaniards.

It confirmed its new growth forecast for this year, which it has revised sharply upwards from 2.9% to 3.3%.

That is more than twice the 1.5% average rate forecast by Brussels for the eurozone–a striking recovery after on-and-off recession in Spain between 2008-13 that left millions of people out of work.

“For the first time since the start of the crisis in 2008, the Spanish economy is starting to see the light at the end of the tunnel,” Economy Minister Luis de Guindos told a news conference.

The conservative government imposed tough spending cuts and tax rises from 2012 that it said were necessary to stabilize public finances.

The governing Popular Party is now touting the recovery ahead of an election due from November, in which it faces a tough challenge from new anti-austerity parties.

Budget Minister Cristobal Montoro on Friday lowered the official forecast for Spain’s public debt to 98.9% of gross domestic product from a previous outlook of 100.3%.

He said 2016 was likely to be “the first year in which we start, albeit modestly, to lower the burden of debt on GDP,” which he said will decline to 98.5%.

The average debt level across the countries of the Eurozone was 92.1% at the end of 2014, according to official data.

The Spanish government’s forecast for the public deficit–a key indicator of financial stability that measures how much spending exceeds income–stands at 4.2% of GDP for this year.

The government forecasts it will fall below the 3% level set by European treaties in 2016.