News from Spain
Economy Minister Pedro Solbes acknowledged on Wednesday that economic growth in the first quarter of this year would be "significantly below" compared with the last quarter of 2007, when GDP grew by 3.5 percent.
After a decade of average economic growth of 3.8 percent, the International Monetary Fund forecasts Spain's GDP will slow to 1.8 percent this year as a massive housing boom comes to an abrupt halt In 2009, the multilateral organisation sees growth at 1.7 percent.
The Bank of Spain recently cut its estimate for GDP growth this year to 2.4 percent from 3.1 percent, with the global credit crunch adding to Spain's economic woes.
"Our growth rates and job creation are clearly less today than a few months ago," Solbes said at a seminar on Spain's financial sector.
Solbes did not give a figure for expected growth this year. The government's official target is still 3.1 percent but it is expected to revise that figure when its reviews its assumptions for this year's budget in July. However, he said the IMF's figures struck him as being a "little low".
The National Statistics Institute is due to publish a flash estimate for GDP growth on 14 May.
Solbes predicted the economy would start to pick up again in the second half of 2009 and would be close to a potential growth rate of around 3 percent at the end of 2010, or during the start of the following year.
"We should see a normalisation of growth in the second half of 2009, and return to levels closer to the potential in 2010," Solbes said.
The government is planning to use part of last year's surplus to hand back EUR 400 in personal income tax to taxpayers to help boost economic growth
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