MADRID — Spain faces the prospect of high unemployment and sluggish growth lasting years unless the country and Europe take "urgent action" to slash the nation's crippling 27 percent unemployment rate and free frozen credit to businesses so they can expand, the International Monetary Fund said Wednesday.
A report issued by the IMF praised Spain's reforms for stabilizing an economy that almost imploded last year, particularly by propping up public finances, but said the jobless rate is "unacceptably high and the outlook difficult."
After years of recession, Spain will probably start growing economically at the end of this year and into next year but the growth may not be enough to bring down the unemployment rate, said James Daniel, the IMF mission chief for Spain.
"The uncertainty is whether the recovery will be strong enough to generate jobs," Daniel told reporters.
Spain has been in recession for most of the past four years following the collapse of its once-booming real estate sector in 2008. Concerns over its public finances, drained as the government tried to spend its way out of the financial crisis, have also piled the pressure on the government to rein in spending.
The country narrowly avoided taking an international bailout like those accepted by Greece, Ireland and Portugal. But it did receive permission last year from a European-funded program to tap as much as 100 billion euros ($133.74 billion) to save ailing lenders, and has taken 40 billion euros so far.
The IMF said it expects Spain's economy to grow about 1 percent a year over the next five years with "limited gains in employment."
The organization went on to compliment Spain for restoring credibility to its economic policies through a series of harsh and unpopular austerity measures imposed last year by Prime Minister Mariano Rajoy. These raised taxes and cut cherished government services like education and national health care.
