Spain forecasts stronger economic outlook in 2014-15

Spain forecast Wednesday faster economic growth in the next two years as the nation emerges from a long downturn with unemployment still topping 26 percent. Economy Minister Luis de Guindos said the eurozone's fourth-largest economy would expand by an average of 1.5 percent in 2014 and 2015. "It is a substantial change," he told a meeting of Spanish financial journalists. Until now, the government's official forecast has been for economic growth of 1.0 percent in 2014 and 1.5 percent in 2015. De Guindos said the brighter outlook would be incorporated into Spain's growth, deficit and employment targets for 2014-2017, which are to be submitted to the European Union. The so-called stability programme is to be approved by Prime Minister Mariano Rajoy's conservative government on April 30. The bursting of a decade-long property bubble in 2008 plunged Spain into five years of stop-start recession, which destroyed millions of jobs and flooded the economy with debt. - 'Terrifying' unemployment rate - The economy emerged gingerly in mid-2013 from the latest two-year downturn and appears now to have regained the trust of previously wary investors, with Spanish borrowing costs falling sharply on the bond market. Spain's lower financing costs, combined with higher tax receipts, would probably allow the Treasury in the next few days to lower its estimate of the money it needs to raise by issuing bonds, the minister said. Spain has estimated its net financing requirements for this year at 65 billion euros ($90 billion). "We will be clearly below 65 billion," De Guindos said. When including the cost of servicing previously issued debt, Spain has estimated financing needs for 2014 at 133.3 billion euros, of which 38.8 percent has already been covered by bond sales. "The goal is to achieve two years in a row of growth, with net job creation, and that will be the exit door from the Spanish crisis," De Guindos said. Nevertheless, jobs growth will be "clearly insufficient" in the face of the 26.03-percent unemployment rate reported by Spain for the final quarter of 2013, he said. Spain is to publish on Tuesday its unemployment data for the first quarter of 2014. De Guindos warned that job figures are generally worst in the first quarter of the year. "A country with an unemployment rate of 26 percent is starting at a terrifying level," de Guindos said. The Bank of Spain is predicting an unemployment rate still at 25 percent in 2014 and 23.8 percent in 2015.