Spain data signals return to recession

MADRID - Agence France-Presse

A protester bangs cooking pot outside the Spanish Bankia bank during a protest in Madrid on March 22, 2012. Spain is facing a serious jobless problems.

Spain’s unemployment-scarred economy has skidded back into recession, a Bank of Spain report signaled yesterday, as activity shrank in the first quarter of 2012.

If the report is confirmed by official data, it would mean economic output has declined for two straight quarters and that Spain is in a recession even as the government takes an axe to spending.

“The most recent information relating to the beginning of 2012 confirms a continuation of the contraction of activity in the first quarter of this year,” the bank said in its March economic bulletin.

The central bank did not give a figure for the first quarter contraction but said it was mainly caused by a decline in private consumption in January and February to levels not seen since 2010.

The Spanish economy, the fourth-biggest in the euro area, had already shrunk by 0.3 percent in the fourth quarter of 2011 compared to the third quarter, according to official data.

PM Mariano Rajoy’s conservative government, in power since December, announces on Friday a 2012 budget that assumes an economic contraction of 1.7 percent this year after 0.7-percent growth in 2011.
Spain emerged only at the start of 2010 from an 18-month recession triggered by a global financial crisis and a property bubble collapse that destroyed millions of jobs.