Rajoy says economy will grow between 0.1 and 0.2 percent in the third quarter

Prime Minister Mariano Rajoy has predicted the Spanish economy will emerge from a prolonged recession in the current quarter, with GDP rising between 0.1 and 0.2 percent on a quarterly basis. But the conservative Popular Party (PP) leader declined to say when growth would be strong enough to create jobs.

"Spain is out of recession but not out of the crisis," Rajoy said in an interview with The Wall Street Journal, published on Monday. "The task now is to achieve a vigorous recovery that allows us to create jobs."

Rajoy also predicted that GDP would grow by between 0.5 and 1.0 percent next year, adding that for the recovery to gather pace consumers would have to spend more, house prices would have to bottom out and the country’s debt would need to stabilize.

"I won't dare to speculate," he said when asked when unemployment, currently at 26.3 percent, would start to fall. "The improvements will happen little by little," he said.

The PP leader also said he does not expect Spain to need to extend the some 41-billion-euro loan it received from its European partners to clean up the country’s banking sector. He said the country’s banking system is now “more transparent, more solvent and better capitalized” as a result of the bailout.

Rajoy acknowledged that his popularity had been hit by the government’s austerity drive, but added: “If people see that what we have done is producing results, and also see that what has been done is creating a solid base for the future, I think we are in a condition to recover. But you can't govern a country thinking every day whether or not they're going to vote for you.”

Asked whether he'd run for re-election, he said: "I have no intention to retire, but my party will decide."