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Spain raises 2011 jobless rate forecast

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Spain raises 2011 jobless rate forecast

Spain, which has the highest unemployment rate among industrialised countries, revised upwards its forecast for 2011 to 19.8 percent from 19.3 percent on Wednesday.

The rate will ease to 18.5 percent in 2012, 17.3 percent in 2013 and 16 percent in 2014, Finance Minister Elena Salgado told a news conference.

The figures are all higher than previously forecast by the government.

'These are figures which are more realistic,' Salgado said.

The new predictions, however, are still below those of the Bank of Spain which said last week that the unemployment rate 'may continue to rise in 2011 and will only begin to fall slightly in 2012 in the absence of additional labour market measures.'

The labour ministry said Monday that the number of Spaniards out of work rose for a third consecutive month in March, up 0.8 percent from February to 4.33 million for the highest level since records began in 1996.

The government does not provide a jobless rate but the National Statistics Institute, which uses a different calculation method from the labour ministry, said in January that it stood at 20.33 percent at the end of 2010.

That is the highest level in the Organisation for Economic Cooperation and Development and topped the government target of 19.4 percent for the year.

Spain’s booming construction industry drew millions of unskilled immigrant workers and generated high levels of economic growth in the decade to 2008.

But the collapse of the property bubble, compounded by the global financial crisis, left many people out of work, especially immigrants and youths.

Salgado also cut the country's 2012 growth forecast to 2.3 percent from 2.5 percent but maintained the estimate that the public deficit will drop to 4.4 percent of output that year from 6.0 percent in 2011.

For this year, the government left unchanged its forecast for growth of 1.3 percent.

The Spanish economy, the European Union's fifth biggest, contracted by 0.1 percent in 2010 after shrinking 3.7 percent in 2009.

Spain along with bailed-out Greece and Ireland were the only eurozone economies to shrink in 2010.

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