MADRID (AP) ― Spain slipped back into recession as the country’s economy contracted for the second quarter in a row, the central bank said Monday.
A Bank of Spain monthly report recorded that economic output shrank 0.4 percent in the first quarter of the year, following a 0.3 percent decline in the last quarter of 2011. A technical recession is commonly defined as two consecutive quarters of economic contraction.
The news of recession comes as no surprise, however ― the new conservative government has previously warned the economy is shrinking and forecasts it will contract 1.7 percent this year.
Prime Minister Mariano Rajoy has already pushed through a series of labor market and financial sector reforms, taken drastic deficit-reduction measures, and warned Spaniards to that things will get worse before they better. The jobless rate is nearly 23 percent and expected to rise.
The Bank of Spain’s figure is a preliminary estimate. The official GDP figure from the National Statistics Institute comes out April 30.
In financial markets, the country remained under pressure on Monday ― the yield, or interest rate, of 10-year Spanish bonds rose 4 basis points to 5.97 percent. The Ibex-35 stock index slumped 2.8 percent.
The central bank said domestic demand dropped again, but foreign demand for Spanish goods rose, but at a slower pace than usual. For the first time in seven quarters, GDP compared to the same figure a year ago fell by 0.5 percent.
