Spanish Prime Minister
Rajoy sat down with NHK WORLD to discuss Spain's economic outlook and his challenges for the future.
"We must leave behind the gloomy perception that there has been of our economy."
He said investors in the Eurozone were encouraged by recent data, and that officials upgraded the 2014 growth outlook.
"We've come out of the recession, which is prologue to coming out of the crisis. But there's already crucial data that the Spanish economy is improving. We've reduced public deficit, and started to control spending. The foreign sector is working well. Exports are growing, not just to the Eurozone but around the world."
But he acknowledged high unemployment is still a problem. Spain's jobless rate of over 26 percent is among Europe's worst. Young people are hit particularly hard with more than 50 percent of them unable to find work.
"I believe in order to fix the problem of juvenile unemployment in Spain it's not about putting through one, two, or three measures. It's about making an economic policy that generates economic activity and prompts economic growth so there's the space for more jobs. It wasn't easy to implement the labor reform. But we didn't intend to harm anyone. The only objective of the reform is to create employment."
Investors were put off by Spanish banks' financial health after the 2008 collapse of US institution Lehman Brothers left many Spanish lenders with uncollectible loans.EU leaders stepped in to bail them out, but market players are still cautious. Rajoy believes ensuring transparency in banks is key to regaining their trust.
"We had an audit done by an independent consultant selected in agreement with the European Central Bank. The ECB will eventually supervise and evaluate all European banks because that will allow for more transparency. It will make it clear which ones are solvent, of course all the Spanish banks are, and it will mean everyone knows the rules of the game."
The Spanish leader is confident his country is on a steady path to recovery. But investors are waiting to see if the Eurozone's fourth-largest economy holds the solution to the region's problems.