Six million jobless in Spain
Economists predict an even bigger slump on the way
Spanish Prime Minister Mariano Rajoy's first year in office is significantly marred as new data shows that the nation - the Eurozone's fourth largest economy, currently sees sic million people out of work. Exports fell 0.6 percent in November, the same month the previous year, when they had risen 7.4 percent, the Economy Ministry said today.
Spanish Prime Minister Mariano Rajoy's first year in office is significantly marred as new data shows that the nation - the Eurozone's fourth largest economy, currently sees 6 million people out of work.
This bad news comes at a time when the government will struggle to meet its budget goals. Investors, however, with the prospect of a European Central Bank backstop in the event of a bailout enabling the Treasury to fast-track higher 2013 funding needs, are expected to sell 16 billion euros or $21 billion) at its first three auctions at lower costs.
"Unemployment will continue to rise this year," Sara Balina, an analyst with Madrid-based consultancy firm Analistas Financieros Internacionales says. "Demand will deteriorate and outweigh the positive contributors to growth that are tourism and exports."
According to a median of 10 estimates in a Bloomberg survey, unemployment rose to 26 percent of Spain's active workforce in the last quarter, creating six million jobless.
Missed payments as a proportion of total loans at Spanish banks rose to a record 11.38 percent in November. Purchases of the country's banks' bonds and shares have spurred rallies of 19 percent this year in Banco Popular Espanol SA and 16 percent for CaixaBank SA.
The default rate on loans to companies rose to 17 percent in the third quarter, 30 percent for real estate-linked activities and 3.49 percent for homeowners. In the meantime, the Bank of Spain is seeking to improve data on evictions due to mortgage defaults after suicides linked to home repossessions provoked public outrage, prompting government measures to limit them.
The Spanish economy will contract 1.5 percent this year after shrinking 1.4 percent in 2012, according to the median of 26 estimates in a Bloomberg survey. GDP declined between 1.3 percent and 1.4 percent last year and will be flat or positive in the second half this year, Economy Ministry Luis de Guindos said. The minister said gross domestic product would have fallen between 4 percent and 5 percent last year had Spain requested aid from the ECB and the European Union's rescue-fund.
"We aren't out of the woods," Fadi Zaher, head of fixed-income sales and trading for Barclays Wealth and Investment Management in London says. "The markets have priced in the risk of fiscal consolidation dragging down growth for some time but not that Spain could actually need a bailout."
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