(Xinhua)
Updated: 2008-03-07 11:06

MADRID -- Spain will hold general elections on Sunday, in which Prime Minister Jose Luis Rodriguez Zapatero's ruling Socialist Party (PSOE) will confront the opposition Popular Party (PP) led by Mariano Rajoy.

The country's Socialist government dissolved the parliament on Jan. 14 and set the general election for March 9.

Sunday's elections are expected to be as fierce as the last television debate between the two main contestants on Monday, in which they clashed over the economy and Spain's foreign policy.

TIGHTLY CONTESTED RACE

Results from various opinion polls conducted in recent months put the race at a neck-to-neck tie.

Last December, poll results gave the ruling PSOE a support rateof 45 percent, against 37.5 percent for the opposition PP.

On Jan. 14, the day parliament was dissolved, a poll conducted by an Opina institute showed the ruling party's support rate slip a bit to 43 percent, while that of the PP grew slightly to 40 percent.

With less than a week to go before the showdown, the latest and the last opinion poll released on Monday in Spain's central-right newspaper El Mundo showed the two parties were locked in a dead heat.

The poll gave the government a meagre lead with 43.4 percent against the opposition's 39.3 percent.

Another poll commissioned by right-leaning newspaper ABC gave the Socialist government a two-percent lead over its rivals.

Neither can expect an easy victory, as the lead in the polls did not even exceed the margin of error.

ECONOMY AS THE MAJOR BATTLEFIELD

Spain has been one of the fastest growing economies in the euro zone for the past decade. However, with high unemployment rate, rising inflation and decreasing growth projection, the economy has been constantly used by the opposition to attack the ruling party.

In February, another 53,000 people were registered jobless, adding to the 2.3 million people out of work.

Inflation hovered at 4.4 percent in February, hitting a record high since 1997.

Amid a series of grim data, the government lowered its economic growth forecast for 2008 last month, from 3.3 percent to 3.1 percent.

Pessimism also came from abroad. The International Monetary Fund cut its projection for Spain's economic growth for 2008 from 3.4 percent to a five-year low of 2.7 percent.

The construction boom has been one of the engines of Spain's economic growth, with around 18 percent of Spain's gross domestic product attributed to the construction sector, almost twice the European average.

However, the overheated industry is now in a bleak scenario amid stagnating property prices and the international credit crunch.

Zapatero's government has been accused by the opposition of not having diversified the economy earlier, leaving Spaniards worse off than in 2004 when the PSOE took power.

The ruling party countered by saying that the depressing situation was "temporary," and that Spain is well prepared to face the global financial crisis.

Against such a backdrop, both parties are striving to gain support by promising efforts to revitalize the economy and offer benefits for the people.

Zapatero pledged to create 2 million jobs, while Rajoy promised to exempt those who earn less than US$24,340 a year from paying income tax. They also vowed to end wealth tax and raise the minimum salary.

CAMPAIGN OVER FOREIGN POLICY

Another focus of the political race has been Spain's foreign policy, especially its role in the Iraq war.

Zapatero defeated Rajoy in the last elections in 2004, three days after the Madrid train bombings claimed nearly 200 lives.

The 47-year-old prime minister had obtained support from many Spaniards, as the then ruling conservatives blamed the bombings on the armed Basque separatist group ETA despite evidence pointing to Islamic extremists avenging Madrid's role in Iraq.

Zapatero brought home Spanish troops in Iraq sent by the Popular Party's government as he had promised in the election campaign, but later voted in favor of a United Nations Security Council resolution that asked countries to send peacekeeping forces to the country, which opened him up to criticism from the opposition.

For its part, the opposition vowed to give Spain a bigger say in international issues such as trade, finance and climate change.