Madrid: Spain's jobless rate has surpassed 20 per cent for the first time since 1997, the government said Friday as it offered more dismal news for a recession-plagued economy that is being dragged into Europe's debt crisis.
The National Statistics Institute said the rate rose 1.22 percentage points in the first quarter to 20.05 per cent.
While other major economies in Europe and elsewhere have posted at least tepid growth as they fight to crawl out of recession, the eurozone's fourth-largest economy is still contracting after the collapse of a construction boom that had fuelled years of expansion.
The agency said that as of the end of March, there were 4,612,700 people out of work in the country. The jobless rate is the highest since the last quarter of 1997, when it stood at 20.11 per cent.
The unemployment figure actually came out by mistake Tuesday when the statistics agency posted it online in error, then declined to confirm it as official. Prime Minister Jose Luis Rodriguez Zapatero responded that day saying the jobless rate is now peaking and will start to go down as the economy begins to grow again.
Spain, once among Europe's largest creators of jobs and boasting more than a decade of solid GDP growth, is now suffering its worst recession in decades. It has been in recession since the third quarter of 2008 after the collapse of a boom fuelled by residential construction and credit-fuelled consumer spending. The building sector and related industries had accounted for nearly 20 per cent of the country's economic output.
Last year the economy contracted a whopping 3.6 per cent. The government's official forecast is that the economy will post at least modest growth in the first quarter compared to the last three months of 2009, and contract 0.3 per cent on the year, then grow 1.8 per cent in 2011.
But the country's central bank has predicted a drop of 0.4 per cent this year and expansion of just 0.8 per cent next year, and the European Commission has also said the government's numbers are optimistic.
Standard & Poor's cited weak prospects for growth in the Spanish economy when it downgraded Spanish debt from AA" to AA this week. Last year the government ran a deficit equivalent to 11.2 per cent of GDP.
