Spanish economy will be slow to recover
Monday July 13 2009
THE recovery of the Spanish economy, which like Ireland had a massive reliance on construction, will take longer than expected, a member of the European Central Bank governing board has warned.
ECB executive board member Jose Manuel Gonzalez-Paramo has predicted that Spain's economy will take longer to recover than other most euro-zone nations.
"Recovery will be slower due to the amount of debt, weight of construction, the level of education of the unemployed and deficiencies in the labour market which needs to be made much more flexible," Mr Gonzalez-Paramo said.
The unemployment rate has doubled in less than two years. While most of the workforce enjoys some of the highest firing costs in the world, the World Bank says about a quarter were on temporary contracts and were the first to lose their jobs in the crisis.
"Without labour reform, the sustainability of recovery will be precarious," Mr Gonzalez-Paramo said.
Spain created about half the new jobs in the euro region at the peak of its decade-long real estate and construction boom.
The dual impact of the global financial crisis and a housing-market collapse pushed the unemployment rate to 18pc in April, and the European Commission expects it to rise to 20.5pc next year.
- Wesley McMurray
