Spain-austerity, recession, more austerity, recession, more austerity…..
Spanish economy slipped back into recession in the first quarter of 2012, making the government’s job of meeting the deficit targets even tougher amid the public anger against the deepening austerity and record-high unemployment.
Gross domestic product contracted 0.3 percent quarter-on-quarter in the first quarter, the statistical office INE said Monday. This followed a 0.3 percent fall in the fourth quarter of 2011, which was the first decline in activity since the final three months of 2009.
The country is now in a technical recession, which is commonly defined as two consecutive quarters of economic contraction.
However, the latest result was better than the 0.4 percent decline estimated by the Bank of Spain last week. Economists had expected a 0.5 percent drop.
Annually, the GDP fell 0.4 percent following a 0.3 percent expansion in the previous quarter. Economists had forecast a 0.6 percent fall. Bank of Spain had estimated a 0.5 percent annual fall in GDP. ( full reading here.)
Meanwhile, Mr Rajoy warns of new reforms to be announced every Friday, as the economy is in such a bad shape. Truly extreme measures are needed if the Spanish economy is to be saved. From El Pais.
As tens of thousands of people across Spain took to the streets on Sunday to protest against the government’s education and health care spending cuts, Prime Minister Mariano Rajoy issued a defiant statement saying he would continue with his reform agenda.
Speaking at the Popular Party’s Madrid regional congress, Rajoy told delegates: “There will be reforms announced this Friday, and every Friday after that, and they will be major reforms.”
He continued: “I understand perfectly. A lot of people cannot understand the decisions that I am taking at the moment. But the problem is the crisis, unemployment, the recession, and disordered public finances. We have to make structural changes and to take root and branch measures.”
The Rajoy government has introduced stinging austerity measures in its first three months in office. Unemployment has continued to rise in Spain, and is at a euro-zone high of 24.4 percent. More than half of Spaniards under 25 years old are jobless. On Friday Rajoy announced a new set of tax hikes to come into effect next year, saying he had “no alternative.” (Full article here).