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Spain's central bank offers grim economic forecast: more recession, higher unemployment

Spain's central bank is predicting a continuing recession and mounting unemployment for the rest of 2013 as the country struggles to free itself from a broad European slowdown and repair its finances.

The Bank of Spain said Tuesday it expects the country's economy to shrink 1.5 percent this year, compared with 1.4 percent in 2012, and only return to growth in late 2014.

It forecast the jobless rate will rise to 27.1 percent this year, up from 26 percent last year. That also won't start falling until 2014. The country's budget deficit is expected to drop to 6 percent of its economy in 2013, down from 10 percent last year.

Spain's economy is the fourth-biggest of the 17 European Union countries that use the euro after Germany, France and Italy.