Bank of Spain sees GDP shrinking 1.5 pct in 2013

MADRID, March 26 Tue Mar 26, 2013 5:10am EDT

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MADRID, March 26 (Reuters) - The Bank of Spain on Tuesday predicted that Spain's economy would contract by 1.5 percent year on year in 2013, far worse than official forecasts, and that unemployment would hit another record high of 27.1 percent in the course of the year.

The Spanish economy is officially seen contracting by 0.5 percent this year, though the government is widely expected to revise that figure downwards when it publishes its updated forecasts next month.

In its yearly forecasts for the Spanish economy, the Bank of Spain also said it saw the country's public deficit reaching 6 percent of gross domestic product for 2013, above targets set by Europe of 4.5 percent of GDP.

It predicted that the Spanish economy would grow again by 0.6 percent in 2014 and that the public deficit would be 5.9 percent of GDP next year.

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