The Spanish government on Wednesday increased its forecast for the jobless rate this year but maintained its prediction for GDP growth, arguing that weakness in consumer spending would be offset by stronger exports.
Presenting the new figures, Economy Minister Elena Salgado said the administration now expects unemployment this year of 19.8 percent, up from an earlier forecast of 19.3 percent.
The jobless rate ended last year at 20.6 percent, more than double the European average, with a record 4.7 million people unemployed.
The government still believes the economy will be growing at a pace that will start to create jobs in the second half of this year. "The government's forecast is that the number of people out of work will not reach five million this year," Salgado said. "The jobless rate will peak in the first quarter."
The National Statistics Institute is due to release the unemployment figures for the first three months of the year on April 29.
In a report last week, the Bank of Spain said it believes unemployment will continue to rise this year and will only begin to fall slightly in 2012. The administration estimates the jobless rate will drop to 18.5 percent in 2012 and 17.3 percent the following year.
The central bank also questioned the government GDP growth figure of 1.3 percent, forecasting a rise of 0.8 percent, in line with most experts. Salgado on Wednesday stuck to her output figure despite halving the estimate for growth in consumer spending to 0.9 percent. This is expected to be offset by the export sector and less negative public spending.
"The recovery will depend on the foreign sector to a greater extent than we had anticipated," Salgado said.
For next year the government lowered its estimate for GDP to 2.3 percent from 2.5 percent, and for 2013 to 2.4 percent from 2.7 percent.
The government also maintained the public deficit will drop from 9.2 percent of GDP to 6 percent this year and 4.4 percent in 2012.
Source: El Pais