Prime Minister Mariano Rajoy says Spain's recession-hit economy will return to growth in 2014 and begin creating jobs again.

Rajoy said Wednesday that 2013 will be difficult but that Spaniards next year will see benefits from his government's tough austerity reforms that have raised taxes and cut government spending.

Spain's central bank predicts the economy will contract 1.5 percent this year and return to growth in late 2014. It said unemployment will rise to 27.1 percent in 2013 but will start falling in 2014.

Rajoy had predicted a 0.5 percent contraction for 2013 but recently said he would have to revise forecasts.

The Spanish economy has been shrinking for the past 18 months. It initially crashed in 2008 with the collapse of Spain's key construction sector.