MADRID (AFP) – The IMF praised Spanish government’s “strong and wide-ranging” response to its economic crisis Friday but warned that many of the underlying problems have not been fully addressed.
It urged the Socialist government to strengthen reforms already underway, in particular concerning the labour market, and warned of the risk of contagion from the eurozone debt crisis.
“Unwinding imbalances accumulated during the long boom and reallocating resources across sectors will take years and will require determined policy action,” it said in a report.
“And many of the underlying problems of the Spanish economy, especially weak productivity growth and a dysfunctional labor market, remain to be fully addressed.”
The bursting of the property market bubble and the international financial meltdown plunged Spain into recession in late 2008. The economy stabilised in 2010 and has shown slow growth in early 2011.
The crisis sent the unemployment rate soaring to 21.29 percent in the first quarter of
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