Spain's GDP falls as recession deepens
Source: Bloomberg News |
January 24, 2013, Thursday
|
Print Edition
Print Edition
SPAIN'S recession deepened in the last quarter of 2012 after Prime Minister Mariano Rajoy's government approved its fifth austerity package in a year to reduce the second-largest budget deficit in the euro area.
Gross domestic product shrank for a sixth quarter, contracting 0.6 percent from the previous three months, when it slipped 0.3 percent, the Bank of Spain said in an estimate in its monthly bulletin yesterday. Fourth-quarter GDP matched the median forecast in a Bloomberg News survey of 26 economists.
Output may have contracted 1.3 percent in 2012 as budget cuts weighed on economic activity, the Madrid-based bank said. While it's not yet clear if Spain will meet its 2012 deficit target set by the European Union, satisfying this year's goal "will require a very ambitious additional fiscal effort from the central government and the regions," it said.
Rajoy is seeking to avoid a full bailout as a slump in the eurozone's fourth-biggest economy enters its fifth year, undermining efforts to meet EU targets. The European Central Bank's pledge to provide support to nations struggling to trim yields may curb borrowing costs until a recovery, he said last month.
"This is a reminder that although market pressures have eased in response to the ECB's promised intervention, the economic picture in the country is still extremely weak," said Jonathan Loynes, chief European economist at Capital Economics Ltd in London. "If anything, the contractions are getting bigger rather than smaller, the labor market remains in a dreadful condition with no signs of improvement."
Gross domestic product shrank for a sixth quarter, contracting 0.6 percent from the previous three months, when it slipped 0.3 percent, the Bank of Spain said in an estimate in its monthly bulletin yesterday. Fourth-quarter GDP matched the median forecast in a Bloomberg News survey of 26 economists.
Output may have contracted 1.3 percent in 2012 as budget cuts weighed on economic activity, the Madrid-based bank said. While it's not yet clear if Spain will meet its 2012 deficit target set by the European Union, satisfying this year's goal "will require a very ambitious additional fiscal effort from the central government and the regions," it said.
Rajoy is seeking to avoid a full bailout as a slump in the eurozone's fourth-biggest economy enters its fifth year, undermining efforts to meet EU targets. The European Central Bank's pledge to provide support to nations struggling to trim yields may curb borrowing costs until a recovery, he said last month.
"This is a reminder that although market pressures have eased in response to the ECB's promised intervention, the economic picture in the country is still extremely weak," said Jonathan Loynes, chief European economist at Capital Economics Ltd in London. "If anything, the contractions are getting bigger rather than smaller, the labor market remains in a dreadful condition with no signs of improvement."
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