Spanish economy to shrink 0.6 percent in 2010: IMF

Last Updated: Wed, Jan 27, 2010 07:50 hrs

/EFE) Spain, suffering its worst recession in decades, will see its economy shrink another 0.6 percent this year, the International Monetary Fund has said in its latest global forecast.

The euro zone as a whole is expected to grow 1 percent in 2010, while its two biggest economies, Germany and France, should experience growth of 1.5 percent and 1.4 percent, respectively, the IMF said Tuesday.

IMF economists predict the Spanish economy will expand by 0.9 percent in 2011, compared with median growth of 1.6 percent across the euro zone.

More than 3.9 million Spaniards were unemployed last month. Madrid does not publish statistics on the jobless rate, but the latest figures from the European Union show Spanish unemployment at nearly 18 percent.

In global terms, the IMF expects a two-speed recovery in 2010, as rich-world economies remain 'sluggish by past standards, whereas in many emerging and developing economies, activity is expected to be relatively vigorous, largely driven by buoyant internal demand'.

Emphasing the fragility of the recovery, the IMF said governments should 'fully' implement fiscal-stimulus measures planned for 2010 and predicted that gross domestic product in developed countries will not return to pre-recession levels until late 2011.