Spain falls back into recession: official data
Spain fell into recession in the first quarter of 2012 with a decline of 0.3 percent in gross domestic product (GDP), the same rate of contraction recorded late last year, official data showed on Thursday.
Final figures released by the the National Statistics Institute (INE) confirmed preliminary data issued on April 30 and underscored the precarious state of the eurozone’s fourth biggest economy as it battles 24.4 percent unemployment, a record high.
Recession is officially defined as two successive quarters of economic contraction.
Weaker domestic demand, including household consumption and public spending, had undermined growth as Spain struggled with austerity measures aimed at cleaning up its finances, the INE said in a statement.
Spanish exports and its tourism sector have not been able to make up the difference, owing to a generally weaker economic climate elsewhere in Europe.
Exports rose by 2.2 percent in the first quarter from the same period a year earlier, the slowest pace in at least two years, while imports fell by 7.2 percent.
Spanish growth depended to a large extent on the construction sector, which went into a slump in 2008, and the country’s last recession lasted until early 2010.
Spanish officials acknowledge that the economy is going through one of its toughest moments ever, but have voiced optimism for the future.
Economy Minister Luis de Guindos has estimated that gross domestic product will shrink by 1.7 percent this year, but forecasts slight growth of 0.2 percent in 2013.
The national foundation of savings banks, Funcas, is less optimistic, and estimates that the recession will last until the second half of 2013.
Analysts at Commerzbank expect Spain to be the only eurozone country still in recession next year, with a drop in GDP of 0.3 percent.
Spain’s return to recession comes as the government battles to cut the public deficit, curb fast-rising debt and reassure sovereign debt markets that it will not need a financial bailout like Greece, Ireland and Portugal.
Spain missed its deficit target by a large margin last year, allowing it to hit 8.5 percent of GDP instead of the 6.0 percent level agreed with the European Union.
With a series of biting and unpopular austerity measures, the government says it is determined to get the deficit down to 5.3 percent this year and to 3.0 percent — the EU deficit ceiling — in 2013.
Recession and unemployment complicate that task, however, because they reduce government tax revenues while increasing expenses on items like jobless benefits.