Spain's economy will contract 1.6 percent this year and unemployment will jump to nearly 16 percent, the government predicted today in a desperately gloomy outlook for a country that had been one of Europe's great success stories, The Associated Press reported. This year the government will also run up a huge deficit equivalent to 5.8 percent of GDP, nearly double the 3 percent target set by the European Union, Finance Minister Pedro Solbes said. The economy will start to recover in 2010, but vigorous growth will not return until 2011, he told reporters Friday after a Cabinet meeting at which a major revision of Spanish economic growth forecasts and other figures was presented. «The panorama I have just described is a complex and difficult one,» Solbes said. Until now, even as economists and the OECD predicted negative economic growth in Spain in 2009, the government had insisted it foresaw at least moderate expansion.
