LOS ANGELES, CA (Catholic Online) - According to the new data released this week; unemployment levels hit 24.4 per cent at the end of March, the highest level since 1996. The rate for people under 25 years of age was 52 per cent, up from 48.5 per cent in the previous quarter.

According to the national statistics institute, the number of unemployed people in the country has now risen to 5,639,500 people, a rise of 365,900 from the last quarter. Overall, total unemployment has risen 1.5 per cent, from a level of 22.9 per cent of the labor force in the final quarter of 2011.

"The figures are terrible for everyone and terrible for the government,' Jose Manuel Garcia-Margallo, the country's foreign minister told radio journalists. "Spain is in a crisis of enormous magnitude."

Standard & Poor cut the country's short-term rating, and placed it on negative outlook, meaning that there is a risk of further downgrades to come.

"We believe that the Kingdom of Spain's budget trajectory will likely deteriorate against a background of economic contraction in contrast with our previous projections," it said in a statement released this week.

"At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector."

S&P predicts the Spanish economy will shrink by 1.5 percent this year, having previously forecasted growth of 0.3 per cent. Spain's new conservative government has forecast that the economy will contract by 1.7 per cent this year.

The Spanish central bank confirmed this week that Spain is in recession for the second time in three years.

S&P's cut in Spain's rating came as no surprise. Ratings agency Moody's had cut the country's rating by two notches in early February, citing the country's difficult fiscal outlook.

The Spanish government responded to the cut by S&P by saying that the agency did not properly take into account reforms put in place to reactivate the economy.
 
"They haven't taken into consideration the reforms put forward by the Spanish government, which will have a strong impact on Spain's economic situation," Esther Barranco, a government spokeswoman told Reuters.

S&P did praise some of the government's measures aimed at bolstering the economy.

"Despite the unfavorable economic conditions, we believe that the new government has been front-loading and implementing a comprehensive set of structural reforms, which should support economic growth over the longer term," said S&P.

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