A Spanish flag flutters in the wind near a statue of Columbus in Madrid. File picture: Andrea Comas

Spain's recession will be less severe this year than had been expected, Economy Minister Luis de Guindos said Monday, estimating that the economy would contract by 1.3 or 1.4 per cent.

The government had earlier said it expected a contraction of 1.5 per cent.

But the fourth quarter of this year will be the worst since the crisis began five years ago, de Guindos warned in an interview with Spanish National Radio.

Despite the recession and the “dramatic” unemployment rate of 25 per cent, de Guindos saw signs that Spain “could be leaving the worst of the crisis behind,” such as an upsurge in exports and the banking sector reforms carried out by the government.

The economy is expected to begin growing again in 2014. - Sapa-dpa