Spanish economy forecast to shrink by 0.6% in 2010

 

After suffering its worst recession for decades, Spain will see its economy shrink by a further 0.6 % this year, the International Monetary Fund has reported in its latest global forecast.

It is estimated that the Eurozone as a whole will grow by 1% in 2010, while its two biggest economies, Germany and France, should experience growth of 1.5 percent and 1.4% , respectively, the IMF said Tuesday.

IMF economists predict the Spanish economy will expand by 0.9% in 2011, compared with median growth of 1.6% across the euro zone.

More than 3.9 million Spaniards were unemployed last month. Madrid does not publish statistics on the jobless rate, but the latest figures from the European Union show Spanish unemployment at nearly 18%.

In global terms, the IMF expects a two-speed recovery in 2010, as rich-world economies remain 'sluggish by past standards, whereas in many emerging and developing economies, activity is expected to be relatively vigorous, largely driven by buoyant internal demand'.

Emphasising the fragility of the recovery, the IMF said governments should 'fully' implement fiscal-stimulus measures planned for 2010 and predicted that gross domestic product in developed countries will not return to pre-recession levels until late 2011.