Oct. 19 (Bloomberg) -- Spain’s economy is starting to see results after the government slashed deficits and overhauled labor laws, said Angel Gurria, the head of the Organization for Economic Cooperation and Development.
The country’s 26 percent unemployment rate has “stopped growing” as labor costs converge with productivity similar to Germany, Gurria said. He complimented Spain’s coalition government for passing reforms while facing pressure from protests.
“Spain is on the right track,” Gurria, Secretary General of the Paris-based OECD, said in an interview today on the sidelines of the Ibero-American summit in Panama. “It’s been tough, but it’s a time of reckoning.”
Prime Minister Mariano Rajoy said in a Sept. 26 interview that the Spanish economy is emerging from its two-year recession and the government doesn’t plan additional austerity measures as it’s confident it can meet this year’s deficit goal of 6.5 percent of gross domestic product.
The government has vowed to tighten rules on jobless benefits and crack down on fraud. Speaking in Panama today, Rajoy credited his government’s policies for helping Spain “emerge from a grave economic crisis.”
The euro region’s fourth-biggest economy will expand 0.6 percent in 2014 after contracting an estimated 1.4 percent this year, according to the median estimate in a survey by Bloomberg.
Spain expects European Union members to agree next month that its banks don’t need further state aid as the euro region’s fourth-largest economy starts to recover from a six-year slump. Its 12-month borrowing costs fell this week to the lowest since April 2010, when Greece requested its first bailout from the EU.
Rajoy was joined by Mexican President Enrique Pena Nieto and 11 heads of state taking part in the final day of the annual Ibero-American summit of leaders from Latin America, Portugal and Spain. The presidents of Venezuela, Brazil and Argentina didn’t attend.
To contact the reporter on this story: Eric Sabo in Panama City at firstname.lastname@example.org