Spain foresees end of recession

Spanish Prime Minister Mariano Rajoy on Wednesday called on his European partners to implement more growth-oriented policies, while insisting that his government's harsh austerity measures would pay off with a return to economic growth next year.

"Countries that can afford it should spend more," Rajoy said in a televised address to leaders of his center-right People's Party. "Europe is the only region in the world in recession. To overcome this situation we need three things: every country needs to do its homework, we need more [European] integration and we need growth policies."

His comments were seen as directed toward Germany, Europe's largest economy and one of the few countries in the European Union with the capacity to spend more money.

Rajoy added that the Spanish economy would continue to shrink in 2013, but that next year the fruits of his government's painful budget cuts would begin to appear.

"In 2014 Spain will grow with clarity, and we will begin to create employment," he said. "Spaniards will notice tangible results from the efforts they have made."

Spain's economy has been contracting for the past year and a half, following a meager recovery from the 2008 collapse of the construction sector. The Spanish central bank predicts a 1.5 percent contraction in gross domestic product in 2013, but that it will return to positive growth in 2014.

Unemployment in Spain in February stood at 26.3 percent, second in the EU only to Greece at 26.4 percent. The central bank expects that rate to increase to 27.1 percent by the end of this year before beginning to fall by 2014.

acb/kms (AP, Reuters)