Spanish Recession Deepens

Spain’s worsening economy fell deeper into recession in the final quarter of 2012, contracting at the fastest rate in three years and intensifying pressures on the country’s corporates and their treasury departments. The data follows recent news that the jobless rate for 16 to 24-year-olds during the quarter jumped to 55.13%, from 52.34% in the previous quarter.

The country’s gross domestic product (GDP) fell by 0.7% in Q412; exceeding the figure predicted by analysts of 0.6% and more than double the fall of 0.3% recorded in Q312. A report by the National Statistics Institute (NSI) showed the recession, which started in late 2011, is intensifying in the eurozone’s fourth-largest economy. Latest data suggests that GDP for the whole of 2012 declined by 1.37%, while the year-on-year decrease in Q412 was 1.8%.

Citigroup has predicted than the Spanish economy will contract by 2.2% this year and by a further 2% in 2014. This would push total unemployment, which now totals 5.97m people representing a rate of just over 26%, to 28%.

Other data released earlier this week showed that the country’s retail sales for December 2012 were 10.7% lower than a year earlier as austerity measures and the rising jobless rate impacted on consumers. The country’s association for car manufacturers, the Asociación Española de Fabricantes de Automóviles y Camiones (ANFAC) reported that vehicle output fell by 17% in 2012 to fall below two million vehicles for the first time since 1993, and representing a contraction in the industry of one third since the onset of the global financial crisis five years ago.

The gloomy data will intensify the government’s task of improving Spain’s public finances, despite success earlier this month in
bond auctions.

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