Zapatero Sees Spain Returning to Growth in First Half
19 February 2010 @ 13:41
MADRID—Spain's gross domestic product will return to growth during the first half of 2010, Prime Minister José Luis Rodriguez Zapatero said Wednesday, after final data showed that the country was still in recession in the fourth quarter of 2009.
In a speech to Spain's parliament, Mr. Zapatero also said the country is able to reduce its budget deficit and called for opposition parties to reach an agreement with the government on reforms necessary to overcome the economic crisis.
New spending cuts through the year 2013 could exceed €50 billion ($68.85 billion), he said. In 2010, the government plans spending cuts of €5 billion, he said.
Austerity measures will affect all areas of government apart from social spending, research and development, sustainable economy funds and development aid, Mr. Zapatero said.
Spain's budget deficit reached 11.4% of GDP in 2009, raising concerns about the sustainability of the country's finances. The government has forecast a 9.8% of GDP deficit for this year, and has said it wants to push the deficit down to 3% of GDP by 2013, in line with European Union rules.
"We will take any measures necessary to correct any trend that would divert from the path of fulfilling budget targets," Mr. Zapatero said.
Spain's gross domestic product fell 0.1% in the fourth quarter from the third quarter, and was down 3.1% against the fourth quarter of last year, final data from Spain's National Statistics Institute, or INE, showed Wednesday. It also confirmed that GDP fell 3.6% in 2009.
The country remains in recession while its euro-zone peers returned to growth in the third quarter, although for some countries GDP stagnated or declined in the fourth quarter.
Spain's economic crisis was exacerbated by the collapse of its once buoyant construction sector, which led to a steeper rise in unemployment than in all other European Union countries bar Latvia.
Spain's jobless rate hit 18.8% in the fourth quarter, according to the INE.
Mr. Zapatero Wednesday also said it was necessary to extend accords with all political forces in the country, and said his government will set up a commission with opposition parties to reach a consensus on how to end the crisis.
The commission is slated to discuss the creation of employment, industrial policy, plans to cut the deficit and reform of the financial system.
The government aims to pass these pressing reforms before the end of the first half, Mr. Zapatero said.
The leader of the opposition People's Party, Mariano Rajoy, said the government's lack of direction and improvised economic policies had led to an "ocean of debt."
To return to growth, Spain also needs to reduce taxes, Mr. Rajoy said.
Source: Wall Street Journal