Spain’s unemployment rate in the fourth quarter of 2012 jumped to a record high of 26.02 percent mounting concerns over deepening of a second recession in the economy, data released by the National Statistics Institute showed Thursday.
About six million people are out of work as the rate of unemployment rose by 1 percent from 25.02 percent recorded in the third quarter of the fiscal year. In this year, 691,700 people lost their jobs as the once booming real estate sector collapsed.
The data showed that Spain now has 1.8 million households with no member of the family employed. According to the data, unemployment rate is high among the youth with 60 percent of people under the age of 25 unemployed in the fourth quarter. Spain’s unemployment rate is more than double the European Union average.
Spain is battling the onset of a second recession as the economic growth contracted in 2009 till end 2011. A housing bubble burst left millions of low-skilled workers unemployed hurting business sentiment, consumer spending and imports. The one-year-old conservative government has taken several austerity measures besides financial and labor reforms intended to cut down expenditure to rein in the ballooning fiscal deficit.
According to the economists, the austerity measures are hurting the economic growth, in the short term and the economy needs to bottom out before it recovers.
"We haven't seen the bottom yet and employment will continue falling in the first quarter," Citigroup strategist Jose Luis Martinez told Reuters.
In the fourth quarter, economy shrank by 0.6 percent, at its fastest pace since 2011, the Bank of Spain said Wednesday.
The central bank estimated that economic growth was down 1.7 percent in the fourth quarter on a year-on-year basis, as the private consumption dropped due to tax hikes and wage cuts.
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