EU forecast on Spain 1 pct worse than Madrid

MADRID - Reuters

The statue of Spanish poet Federico Garcia Lorca has been tied with a rope by demonstrators during a general strike in Madrid. EPA photo

The European Commission has set dire economic forecasts for Spain until 2014, a newspaper reported yesterday, shooting down the targets set out by Madrid and potentially pushing it closer to seeking eurozone aid.

Neither the Commission nor Spain’s economy ministry would confirm the report in El Pais but Prime Minister Mariano Rajoy said in a radio interview that 2012 would be his country’s worst year, to be followed by improvement. He said Spain would return to growth in 2014, the same year forecast by the Commission according to El Pais, which cited a draft document. The newspaper reported that the Commission forecasts showed 2013 would be at least as bad as 2012. It saw a 1.5 percent decline in Spanish gross domestic product in 2013 in line with consensus but significantly worse than the 0.5 percent contraction expected by the Spanish government.

Rajoy raises hopes

The Commission is due to officially announce its autumn economic forecasts today, covering growth, inflation, debt and deficit projections. “In 2014, there’ll be growth in Spain. The worst year will have been 2012 and next year will be better,” Rajoy said during his radio interview. The Commission also expects the Spanish economy to grow 2014 but its 0.5 percent growth forecast for that year is far below the 1.2 percent growth forecast by the government, El Pais said. In 2012, the Commission forecasts the Spanish economy to fall by 1.6 percent this year, slightly worse than the 1.5 percent fall in GDP forecast.