Paul White, Associated Press
MADRID — The worst of the recession is over for Spain, the government said Friday as it improved its forecasts for unemployment and economic growth. But the recovery is likely to be slow and hard.
The government expects the jobless rate to average 25.9 percent in 2014. While that is down from a previous forecast of 26.7 percent and slightly better than the current 26.3 percent, it is still close to a record high for Spain.
The economy is forecast to grow 0.7 percent next year, up slightly from the previous estimate of 0.5 percent released in April.
Deputy Prime Minister Soraya Saenz de Santamaria announced the figures alongside the government's budget for next year, which she described as "the first budget of recovery."
The country has been in recession for most of the past four years. The collapse of its property market in 2007 led to widespread unemployment in the large construction sector and caused massive losses for banks, many of which needed a bailout.
That led to huge debt problems for the government, which responded by cutting spending and raising taxes repeatedly, eroding standards of life in one of Europe's largest and most developed economies.
The conservative government says the reforms and austerity measures it has brought in over the past two years are beginning to pay off and the recession should end this year.
Economy Minister Luis de Guindos said that while jobs would continue to be lost, more would be created by the end of the year, making for a 0.1 percent net increase in the number of people employed. For 2013, the finance ministry revised down its unemployment forecast to 26.6 percent from 27.1 percent.
Finance Minister Cristobal Montoro said the budget would "open the door to creating employment."
But while the government has repeatedly said it does not envisage any more major spending cutbacks, the finance ministry on Thursday announced civil servants' wages would be frozen again in 2014.
On the positive side, Montoro announced minor budget spending increases for research and development, culture, housing and education grants, the first in several years.
The government also announced changes to how yearly pensions increases are set, fixing a minimum of 0.25 percent with a possibility of increasing this depending on inflation and the state of the economy. Up to now, pensions have been indexed to the yearly inflation rate.
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