MADRID (AP) — Spain’s prime minister said Thursday he expected the Spanish economy to grow again in the final three months of the year after a flat third-quarter performance raised fears that the eurozone’s fourth largest economy could be heading back into recession.

Jose Luis Rodriguez Zapatero said his prediction last year that 2010 would see a return to growth had been vindicated, but that further reforms were necessary in the year ahead to strengthen the economy.

“This has happened.” he said. “But we know that it is slow and weak growth and we still have decisive tasks ahead to consolidate and strengthen that growth.”

Giving reporters an end-of-year review of the country’s economic and political situation, Zapatero said none of the three quarters this year had falling output and that he expected the final quarter to show growth had returned — official figures for the fourth quarter are not due till early 2011.

The Spanish economy posted a flat quarterly performance during the July-September period though it rose 0.2 per cent on a year-on-year basis — the first such rise in seven quarters. In the first two quarters of the year, growth was extremely tepid.

Spain’s recovery from recession has been the slowest of Europe’s main economies, such as Germany and France.

The country’s recession was triggered by a collapse in its key real estate sector during the international financial crisis.

One of the government’s chief tasks is to slash a swollen deficit from 11.2 per cent of gross domestic product in 2009 to within the European Union limit of 3 per cent by 2013.

Zapatero said the government was on track to meet those objectives following a series of labour market reforms and austerity measures introduced earlier this year.

However, international bodies insist Spain needs to do more.

Zapatero said he was determined to present reforms to the country’s pension system — including pushing back retirement age from 65 years to 67 years — by the end of next month.

“It would be doing the country a disservice not to make these changes now,” Zapatero said.

He said that the raised retirement age would be phased in gradually between 2013 and 2027.

Zapatero argued that adjustments to how pensions are calculated are needed now if the system is not to collapse in the coming years as the number of people retiring swells.

The planned change in retirement age has triggered threats from unions of a second general strike, following one called in September against the austerity measures and labour reforms.

Zapatero said he was confident 2011 would lead to greater employment and help bring down a jobless rate of nearly 20 per cent, the highest rate in the eurozone.