Spain upgrades ‘14 economy outlook

MADRID, Jan 28 (AFP): Spain's government upgraded the economic growth outlook for 2014 Tuesday as the nation shook off five years of stop-start recession that have pushed the unemployment rate above 26 per cent.
Economy Minister Luis de Guindos told reporters in Brussels he expected Spain's economy to expand by nearly 1.0 per cent in 2014, up from an official growth forecast of 0.7 per cent.
The prediction is the latest sign of a brighter horizon for the eurozone's fourth-largest economy, plunged by a 2008 property crash into a jobs-wrecking, double-dip recession.
The big question now, analysts said, is whether the economy will be strong enough to create jobs for the 5.9 million people unemployed in the last quarter of 2013, more than 26 per cent of the workforce.
Spain's economy crawled out of recession with 0.1-per cent growth in the third quarter of 2013.
Both the government and the Bank of Spain estimate that growth picked up to a better-than-expected 0.3 per cent pace in the final quarter, leading to the upward revision for 2014.
Prime Minister Mariano Rajoy's conservative government credits tough economic reforms and austerity policies for pulling Spain back from the precipice of a full-blown bailout, widely feared in mid-2012.
"Two years ago we were on the brink of collapse but thanks to the difficult measures we took internally, the situation is now totally different," De Guindos said.
"We are beginning to see the results," he boasted ahead of a meeting of European Union finance ministers, adding that the new outlook would be reflected in official forecasts to be released at the end of April.
Beside slashing spending to rein in Spain's yawning public deficits, the government reformed the labour market in 2012 by cutting dismissal costs and making it easier to change work conditions.
Raj Badiani, Britain-based senior economist for research house IHS Global Insight, said the Spanish government's 2014 growth revision was probably justified.