What we want to avoid is taking away the stimulus too suddenly, said Spanish Minister Elena Salgado.

Spain Committed to Meet 2012 GDP Target

Spain will withdraw its anti-crisis spending gradually in order to avoid a double-dip recession, Economy Minister Elena Salgado said on Thursday.


'We will take it away gradually, and we still don't have a timetable. What we want to avoid is taking away the stimulus too suddenly, which could cause a 'W'-shaped recovery,' she told a news conference.

Spain's public accounts have gone from a surplus of 2.2 percent of gross domestic product in 2007 to an expected deficit of over 10 percent in 2009 due to a massive economic stimulus package and sliding tax revenue.

The economic stimulus package, one of the largest in the world in relative terms, will have added around 150 billion euros ($214.3 billion) to Spain's debt pile by the end of 2009.

Most economists are skeptical the government can meet its promise of a 3 percent deficit by 2012, in line with European Union recommendations, without sharp spending cuts which would hamper tentative signs of growth.

The government remained committed to the 2012 target, Salgado said when asked if the goal was realistic.

'Half of our deficit has arisen from government measures and half from economic slowdown. Activity will increase, meaning more tax revenue, and by 2012 the stimulus measures would have been withdrawn,' Salgado said.


Story from Forbes.com



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