Despite the pain inflicted on consumers as a result of the government’s austerity drive and high unemployment, Economy Minister Luis de Guindos remained reasonably upbeat on the first day of the New Year about what the future holds for Spaniards in 2013.
In an interview with Spanish radio station Cadena Ser, De Guindos said he expects the economy to be growing at a sufficient pace to start creating jobs in the last quarter of this year.
The government is sticking to its forecast of a contraction in GDP of 0.5 percent this year despite estimates by the IMF and the European Commission that put the figure at almost triple. The economy is estimated to have shrunk 1.5 percent last year when unemployment moved above 25 percent.
De Guindos said that if the labor reforms introduced by the Popular Party government of Prime Minister Mariano Rajoy had been applied earlier there would have been one million people fewer out of a job.
“No country has suffered the destruction of jobs that Spain has,” the minister said. “That is why the first priority was labor reform. Unemployment increased because you won’t see the effect [of the reform] immediately, but it has managed to halt the impact of the economic slowdown from the point of view of employment. It we had had this labor reform two or three years ago, we would have saved a million jobs,” he added.
According to figures from the National Statistics Institute, the number of people out of work at the end of the third quarter stood at 5.778 million. Experts expect this figure to move above six million this year, when the jobless rate is forecast to top 26 percent.
De Guindos said he expects the economy to continue to contract in the first two quarters of the year before growth turns positive in the third. “The foundations are being laid for there to be positive job-creation rates in the fourth quarter,” he added.
The minister said the government is still weighing up whether to seek assistance from the European Stability Fund in order to trigger Spanish sovereign bond purchases by the European Central Bank in the secondary market and reduce the country’s borrowing costs.
“The decision has to be the right one and at the right time,” he said. “This thing about the bailout is not like pushing a button, and by pushing this button funding conditions immediately improve,” he added. “There are many implications and the government needs to consider these implications overall in order to do what is best for Spain’s interests.”