Spain's government lowered its economic growth forecast for this year to 2.3 percent and reported a sharp rise in unemployment, releasing more gloomy figures Friday of a downtown in what had been one of Europe's most vigorous economies. Finance Minister Pedro Solbes revised the economy's growth rate from the previous forecast of 3.1 percent. Solbes said at a news conference after the government's weekly Cabinet meeting that GDP growth forecast for 2009 had also been revised down to 2.3 percent, from 3.0 percent previously. Unemployment rate rose rapidly in the first quarter of 2008, as activity in the once-buoyant construction sector slowed more than expected. The National Statistics Institute said Spain's jobless rate rose to 9.6 percent in the first quarter, from 8.6 percent in the fourth quarter of last year. The institute said Spain created 333,000 new jobs in the 12 months to March 31, down from 475,100 in the 12 months to Dec. 31 and the 615,000 jobs created in the 12 months to Sept. 30. Spain has been one of Europe's main motors of job creation over the last decade, creating more than 600,000 jobs a year and dramatically reducing one of the region's highest unemployment rates. But job creation has slowed sharply in recent months as home-building activity falls off in the face of higher interest rates and tighter lending conditions, the data showed. New home starts fell 20 percent in 2007, government data shows. Finance Minister Pedro Solbes said this week Spanish unemployment could rise to 10 percent in the next couple of years.
