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Spain Unemployment Rate Rises To 24.44%, Exceeds Forecast

Spanish unemployment rate for the first quarter came in above forecast as more people lost jobs in a struggling economy.

The unemployment rate rose to 24.44 percent, the highest in the euro area, from 22.85 percent in the fourth quarter of 2011, data from the statistical office INE showed Friday. Economists had forecast a jobless figure of 23.8 percent.

The jobless rate climbed for the third quarter in a row, after falling to 20.89 percent in the second quarter of last year. The latest figure is the highest since the first quarter of 1994, when it was 24.55 percent.

The number of unemployed increased to 5.639 million from 5.273 million in the previous quarter, when it crossed the 5 million mark for the first time. The figure is expected to rise in coming months due to the government's tough austerity measures.

Late Thursday, rating agency Standard and Poor's downgraded Spanish credit ratings by two notches as it expects further deterioration of the country's public finances amid economic contraction and the need to support banks.

Estimates by Bank of Spain showed on April 23 that the economy slipped back into recession in the first quarter of 2012 with the gross domestic product shrinking 0.4 percent quarter-on-quarter. This followed a 0.3 percent fall in the fourth quarter, which was the first decline in activity since the final three months of 2009.

Spain's borrowing costs keep rising as the economic situation worsens. The country's 10-year borrowing costs surged to over 6 percent earlier this month, close to levels widely seen as unsustainable, triggering concerns that the euro member will be forced to seek an international bailout.

by RTT Staff Writer

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