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Total economic output slumped by 0,7 percent from the previous quarter, the steepest decline since the second quarter of 2009, after a 0,3 percent dip the previous quarter.
The preliminary report by the National Statistics Institute showed the recession, which started in the final months of 2011, still tightening its grip on the eurozone’s fourth-largest economy. Just days earlier, a separate report showed Spain’s unemployment rate shot to 26,02 percent in the fourth quarter — the highest level since the rebirth of Spanish democracy after death of General Francisco Franco in 1975.
Raj Badiani, economist at London-based research house IHS Global Insight, predicted another 0,5 percent decline in gross domestic product in the first quarter of 2013 as households snap their purses shut.
“The outlook for the remainder of 2013 and 2014 is no better,” he said in a report.
“The main impediments to any recovery prospects remain the fallout of the ongoing financial crisis hanging over Spain, coupled with still-punishing employment losses lifting the unemployment rate to 26 percent at the end of 2012, the continued fiscal squeeze, disrupted credit flows and still acute house-price falls,” Badiani said.
“This casts a considerable shadow over the household economy, suggesting consumer spending, which now accounts for 56 percent of GDP, will struggle to provide any positive impetus to economic activity in the next two years.” Latest figures also showed that gross domestic product for the whole of 2012 declined by 1,37 percent, slightly better than the 1,5 percent contraction predicted by the government.
Economy Minister Luis de Guindos said in Davos, Switzerland, last week that he expected the economy to return to growth in the second half of 2013.
But activity is being curbed by his government’s programme of spending cuts and tax rises, aimed at saving US$194 billion between 2012 and 2014, prompting mass street protests. — AFP.
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