Spanish Prime Minister Jose Luis Rodriguez Zapatero warned Friday that Spain's economy faces a "difficult" 2009, as more signs emerged that the country has entered a recession.
"It must be made known that we are currently living through the most difficult and serious moments" of the economic crisis and "2009 will be a difficult year," he said during a press conference.
Zapatero's bleak assessment mirrors the views of financial experts who say Spain's economy has entered a recession and warned that GDP could fall 1.5 percent next year.
On Friday the finance ministry confirmed that the economy had weakened further in the fourth quarter of 2008 after shrinking 0.2 percent in the third quarter -- the first time since 1993.
A recession is broadly defined as two consecutive quarters of negative growth. The International Monetary Fund has predicted Spain's economy will shrink by at least 1.0 percent next year.
Unemployment in the country also looks set to rise to around 16 percent in 2009 from 11.3 percent in the third quarter of this year, according to analysts at Spain's savings bank foundation, FUNCAS.
Spain's once-buoyant economy has suffered as the global financial crisis hit the key construction sector, which was already weakened by oversupply and rising interest rates.
Earlier this month the prime minister said the government would spend 33 billion euros (47.5 billion dollars) in 2009 in a "historic" effort to kick-start an economic recovery amid the global downturn.
Shrugging off opposition criticism that he had failed to swiftly respond to the crisis, Zapatero said the eurozone's fourth-biggest economy is "one of the world's most solid" and will "without doubt" recover by the end of 2009.
He said he would meet with Spanish bankers in January to encourage them to spread credit after the government pledged to guarantee interbank loans of up to 100 billion euros.
Meanwhile he also said the government had approved an increase in the country's minimum wage by four percent, from 600 euros a month in 2008 to 624 euros in 2009.
Copyright 2008 AFP Global Edition
