Brussels, 27/03/2014 (Agence Europe) - Luis Linde, governor of the Bank of Spain, warned on Wednesday 26 March of a real risk of deflation in the eurozone.
The day after the head of the Bundesbank, Jens Weidmann, made comments paving the way for new special European Central Bank financing measures to tackle low inflation (see EUROPE 11046), Linde said that, although small, there was a risk of deflation in the eurozone. At a Deloitte ABC forum, Linde said that interest rates are low at present, but they could be even lower.
The Spanish central bank forecasts growth of 1.2% in the country in 2014 and of 1.7% in 2015. These figures are almost the same as the European Commission's (1% in 2014 and 1.7% in 2015). On current policies, Spain's public deficit will fall from 7.1% in 2013 to 5.8% in 2014 and 5.5% in 2015, although Spain has promised the EU to reduce its public deficit to 4.2% by 2015.
The return to economic growth in Spain is expected to be accompanied by a slight fall in unemployment. Bank of Spain says unemployment reached a peak of 26.4% in 2013 and will fall to 25% in 2014 and 23.8% in 2015. At present, 55% of Spanish inhabitants aged under 25 are unemployed, generating fears of a lost generation (see EUROPE 11045). (MB)