Spanish Economic Recession Substantially Less Intense
Spain’s economy is likely to have shrunk ‘substantially’ less in the second quarter than in the first, though growth will remain negative to the end of the year, the economy secretary was quoted on Monday as saying.
‘We don’t have a precise estimate, but we believe that the fall (in gross domestic product) will be substantially less than in the first quarter,’ Jose Manuel Campa said in an interview with the financial daily Cinco Dias.
‘Until the end of the year we will continue to have negative growth rates, but increasingly smaller ones.’
Spain’s economy shrank 1.9 percent in the first quarter from a quarter earlier, its sharpest contraction in half a century – most acutely felt in theÂ Spanish property market. Savings bank foundation FUNCAS said on Monday the worst may be over.
‘Available data point to a less abrupt contraction in the second quarter than the previous two quarters,’ Funcas said. Talk of economic recovery may be premature, the foundation said.
‘The worst may be over, but that doesn’t mean the economy will recover soon, just that the recession will be less intense,’ Funcas said.
The Spanish economy would shrink by 3.6 percent in 2009 and 0.6 percent in 2010, according to consensus figures published by the foundation on Monday.
The Spanish government has launched one of the world’s largest economic stimulus packages in relative terms which has inflated a ballooning public deficit likely to rise above 10 percent of GDP this year from 3.8 percent in 2008.
Campa reiterated the government’s target to cut the deficit to below 3 percent in 2012 in line with European Union recommendations.
‘It is our commitment to the European Union and we meet our commitments,’ he said. ‘Obviously, it is not easy, but it is feasible.’