Spain says its economy is worsening and that it will take two years longer than first thought to meet Europe’s deficit target.
Madrid said Friday it expects its economy will shrink 1.3 percent this year, instead of the one-half of one percent figure it projected earlier. The government said it expects the Spanish economy will begin to grow again in 2014.
At the same time, Spain, the fourth largest economy in the euro currency bloc, said its deficit would fall this year to 6.3 percent of its national economy. That is a sharp improvement over last year, but still more than double the 3 percent target set by the European Union.
Spain said it would not meet the European target until 2016, two years later than promised in 2012.
Prime Minister Mariano Rajoy embarked on a year of austerity measures when he took office in late 2011, but more than a quarter of the country’s workers are unemployed and the troubled Spanish banking system has had to secure an international bailout.
Economic Minister Luis de Guindos said Spain’s high jobless rate is the country’s key political and social problem.
“The data that affects Spaniards is the deterioration of the labor market. This is obviously the principle political and social problem,” he said. “In fact, I would go so far as to say that this is the principle weakness of the Spanish economy. That Spain has an unemployment rate of 27 percent is the element that makes us most weak in the eyes of international markets.”