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Spain to See Improved Fiscal Deficit in 2011

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TEHRAN, March 31 (ICANA) – Spain's central Bank has said the country's economy is expected to grow 0.8% in 2011 and 1.5% in 2012, that is well below the government's forecasts of 1.3% growth this year and 2.5% in 2012. Economists have rejected the government's growth forecast, citing the possibility of even higher energy prices and rising private consumption this year.
Thursday, March 31, 2011 11:19:56 PM
Spain to See Improved Fiscal Deficit in 2011

The central bank forecast that the government will come close to meeting its target of a budget deficit equal to 6% of gross domestic product this year. However, it said the unemployment would soar further in 2011.

Salary hikes on transitory price rise could also hurt competitiveness levels and growth forecast, while debt market instability might hit credit access for families and businesses.

The National Statistics Institute showed retail sales fell by 4.5 percent year-on-year in February, marking the eighth straight month of falls.

Analysts say chances are slim for Spain's economy to recover soon as consumers continue to stay away from the shops and inflation hovers around 3 percent for the third month running.

Prime Minister Jose Luis Rodriguez Zapatero told Parliament that the latest in a series of measures aimed at cutting the deficit is linking government spending to nominal GDP.

The new predictions of the central bank will make it difficult for Spain to wipe off fear from international financial markets of a possible bail out and assure them that its unsustainable high debt won't make the country follow the footsteps of Greece and Ireland.

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