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Unemployment in Spain Soars to 20.05%; 4.61 Million Jobless

Wednesday, April 28th 2010 - 01:09 UTC
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The Spanish economy, EU fifth largest, remains in recession  The Spanish economy, EU fifth largest, remains in recession

Spain's jobless rate has risen past 20% for the first time in 13 years, according to figures made public by the National Statistics Institute (INE) on Tuesday. Unemployment rate was 20.05% in the first quarter of this year, up from 18.83% in the last quarter of 2009.

Spanish media published the figures despite the Instituto Nacional de Estadística (Spain) cautioning that they were not yet definitive. The institute had intended to make them public on Friday, but they were released earlier because of a computer error.

Spain's unemployment is among the highest in the European Union. Spain was hit hard by the global crisis which contributed to the collapse of its key construction sector, plunging it into its deepest recession in 60 years.

The number of unemployed jumped by 286,200 during the first three months of the year compared with the final quarter of 2009 to reach 4.61 million or 20.05% of the workforce. In a statement, INE confirmed that a technological “incident” had made “certain data” from its quarterly unemployment study visible on its web site but it did not confirm the figures.

Spain has the highest unemployment rate in the 16-nation Eurozone and accounts for half the region's job losses over the last two years, according to the European Union's statistics office Eurostat. Earlier this month, Bank of Spain governor Miguel Angel Fernandez Ordonez warned that “mass unemployment” was the greatest risk faced by the country's banks, which will suffer from less business and higher defaults as a result.

Meanwhile, in January, Finance Minister Elena Salgado raised the government's estimate for the 2010 unemployment rate to 19% from 18.9%. The Spanish economy, Europe's fifth largest, shrank by 0.1% in the last three months of 2009, making it the last major economy still in recession. The government has forecast a return to growth in the second half of 2010.

The Spanish economy has proved especially vulnerable to the global credit crunch, because growth relied heavily on credit-fuelled domestic demand and a property boom boosted by easy access to loans that has collapsed.

French investment bank Natixis estimates that prior to the crisis 30% of Spain's working population worked directly or indirectly for the construction industry. “This was pure madness,” said a research note last month, adding there are 1.2 million unsold housing units currently on the mark.

Categories: Economy, International.
Financial Tags: KN.

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