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Business

Spain officially in recession for first time in 15 years

Latest update : 2009-02-12

According to the country's statistics office, Spain has officially slipped into recession for the first time since 1993. This confirms a provisional estimate by the Bank of Spain from Jan. 28.

AFP - Spain's economy fell into recession in the fourth quarter of 2008, provisional official data showed Thursday, confirming the once-buoyant economy's first recession in 15 years.

The country's economy contracted by 1.0 percent in the fourth quarter of 2008 over the previous three months, the data showed.

Spain's economy, the fifth largest in Europe, shrank by 0.2 percent in the third quarter of last year over the previous quarter.

Recession is widely defined as two consecutive quarters of negative growth.

Last month the Bank of Spain had already estimated that Spanish GDP shrank by 1.1 percent in the fourth quarter of 2008.

Spain's economy has suffered as the global financial crisis has hit the key construction sector, which was already weakened by oversupply and rising interest rates.

In January the government, which had long predicted a slowdown in growth but no contraction, slashed its forecast for the economy to a decline of 1.6 percent this year from the growth of 1.0 percent previously forecast.

The government's response to Spain's economic troubles has been an 11-billion-euro (14-billion-dollar) infrastructure plan to create over 300,000 jobs, mainly through 31,000 public works projects across the country.

Prime Minister Jose Luis Zapatero also said Tuesday that his government was looking into a way to "increase and extend unemployment benefit coverage, whatever the number of unemployed there may be."

Spain's unemployment rate hit 13.9 percent in the last quarter of 2008, the highest in the 27-nation European Union, and the government expects it will rise to 15.9 percent this year before starting to gradually decline.

Date created : 2009-02-12

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