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Spain's unemployment crisis eases

The unemployment rate in Spain fell sharply in the second quarter slipping beneath 25.0 per cent, official data showed on Thursday in a further sign that the country is pulling away from deep economic crisis.

MADRID: The unemployment rate in Spain fell sharply in the second quarter slipping beneath 25.0 per cent, official data showed on Thursday in a further sign that the country is pulling away from deep economic crisis.

The rate fell by 1.45 percentage points and the number of people looking for work fell by 310,400, marking the biggest quarterly fall since the series of statistics began, the data showed. This was the first time the rate had been less than 25.0 per cent, or one in four of the workforce, since the third quarter of 2012.

But 5.5 million people are still unemployed in Spain, which is slowly emerging from deep recession following the global financial crisis since years ago which burst a property bubble and threw the country into deep crisis.

Since then Spain, which was also caught by the eurozone debt crisis, has introduced deep reforms in its economy and has restructured its banking system at great cost, including exceptionally high unemployment. Unemployment has hit young people in particular, as has been the case in some other crisis-hit eurozone countries, leading European Union leaders to speak of a "lost" generation.

However, on Wednesday, the Spanish central bank said that the economy had grown at the strongest rate for six years in the second quarter, expanding by 0.5 per cent from output in the previous three months. The bank also raised its forecasts for output for this year and next, saying the economy would grow by 1.3 per cent this year and by 2.0 per cent in 2015.

Official growth figures for the second quarter are to be published on Wednesday. The Bank of Spain said growth between the first and second quarters of the year was the strongest since just before the global financial crisis began. "In the second quarter, the recovery of the Spanish economy continued in a gradual way, in a context of normalising financial conditions, along with an improvement for employment and confidence," the bank said.

At Berenberg bank in London, economist Holger Schmieding said: "Spain has turned into one of the fastest-growing economies in Europe, supported by a broad-based firming of domestic demand... With annualised growth of roughly 1.8 per cent in the first half of 2014, Spain comes close to our 2.0-per cent call for Germany.

"Interestingly, the two economies at the euro periphery with the most serious banking problems after 2007, Ireland and Spain, seem to be recovering rather fast. Spain is reaping the rewards of its reforms while half-reformed Italy and largely unreformed France have fallen behind. As a general pattern in the eurozone, the countries that once had to ask for external help have done their homework and are among the best performers in Europe. The policies to tackle the euro crisis are paying off."

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