Government to raise official growth forecast to 0.7 percent for 2014

Prime Minister Mariano Rajoy told the Senate on Tuesday that the government has raised its economic growth forecast for next year to 0.7 percent from 0.5 percent.

The Popular Party leader said the new figure will be included in the state budget proposals for 2014, which the Cabinet will approve on Friday.

In an interview with the Wall Street Journal on Monday, Rajoy said that Spain would pull out of recession in the current quarter, with GDP rising between 0.1 and 0.2 percent.

Rajoy said the government is being “prudent” with its forecasts, noting that analysts are predicting GDP growth of 1.0 percent in 2014. However, according to a survey by Spanish think-tank Funcas, the consensus forecast is for growth of 0.7 percent next year.

The prime minister declined to say directly whether public sector workers would continue to see their wages frozen next year. “When the government took power the situation was very difficult,” he said. “We asked civil servants for a considerable effort. I am aware of the work they do and the professionalism of public employees and when we can, we will improve their situation,” he said.

However, Rajoy did guarantee that the traditional Christmas bonus would not be suspended – as will be the case this year – given that there are signs the economy is improving.