Spain touted Wednesday a brighter economic outlook as it emergesslowly from a job-wrecking recession, but with an unemployment rate stuck above20 percent until 2016.Prime Minister Mariano Rajoy's government raised its forecasts for economicgrowth and deficit-cutting efforts, but it tipped only a gradual improvement in the 26-percent jobless rate.The growing optimism in Madrid coincided with fresh data showing the economy grew at a quarterly rate of 0.4 percent in the first quarter of this year, the fastestsince a 2008 property crash tipped the nation into a double-dip recession.Spain, the eurozone's fourth-largest economy, emerged from a two-year downturn inmid-2013 and has since reported signs of a gathering yet modest recovery."We have overcome the recession and recovered the economy's competitiveness,"Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after acabinet meeting."Spain is growing at the fastest pace in six years."The conservative government raised its official economic growth target to 1.2percent this year from 0.7 percent previously. For 2015, the target was raised to 1.8percent from 1.2 percent.- Deflation spectre -Despite struggling to meet past targets to cut its public deficit, the government saidit now expected to trim the shortfall to the equivalent of 5.5 percent of economicoutput in 2014 compared to a previous target of 5.8 percent.But the outlook for the labour market was relatively grim, with a jobless rate of 24.9percent in 2014 and 23.3 percent in 2015, only dipping below 20 percent in 2017.The unemployment rate climbed to 25.93 percent in the first three months of 2014,up from 25.73 percent in the previous quarter, official data show.With unemployment high and incomes under stress, sluggish demand within Spainis simultaneously depressing the price of goods and services, raising fears of adeflationary spiral. Latest data showed Spanish consumer prices rose at an annual rate of just 0.3percent in April, a turnaround from the previous month's 0.2-percent decline yet stillbelow the eurozone's inflation target of nearly 2.0 percent.If prices fall on a broad front for a sustained period, they can lead people topostpone purchases in the hope of getting a cheaper deal later, stalling economicactivity- Long wait for jobs -The implosion of a decade-long property bubble in 2008 flooded the country indebt, tipped the economy into a double-dip recession and wiped out millions ofjobs. By the first quarter of 2013, the unemployment rate had soared to an unprecedented26.94 percent, according to official figures.Substantial job creation remains elusive in Spain, despite being a declared priorityof the Rajoy government."A return to normal in the southern countries of the eurozone will take time," saidPatrick Artus, analyst at French investment bank Natixis, warning it could take 25years for Spain's labour market to return to its pre-crisis situation.Despite being frustrated on jobs, the government points to a dramatic change inSpain's fortunes since mid-2012, when many believed it was on the brink of financialcollapse.The European Central Bank helped Spain to avoid a full-blown bailout at the time,soothing investors by promising to buy stricken eurozone members' sovereign bonds if needed.But the government says its austerity measures and reforms, which sparkedwidespread street protests, also helped consolidate financial market support andlower the country's borrowing costs.