Spain's economy shrinks for seventh straight quarter

Tue Apr 30, 2013 6:36am EDT
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By Paul Day

MADRID (Reuters) - Spain fell deeper into recession in the first three months of the year, the seventh straight quarter it has seen its economy shrink, data showed on Tuesday.

Rising exports and weaker imports, reported separately, provided some relief by cutting the trade deficit.

The data showing further contraction will add to a Europe-wide debate about whether countries should tone down austerity programs intended to cut debt in favor of more growth-focused policies, particularly given concern about rising unemployment.

Euro zone member Spain's jobless rate is 27.2 percent.

The National Statistics Institute said Spain's gross domestic product contracted - on a preliminary reading - 0.5 percent in the first quarter from the last three months of 2012, mainly because of sliding domestic demand.

The government, nonetheless, said the worst of the slump has passed and expects quarterly growth before the end of this year mostly because the country has become more competitive and exports are growing.

"All the indicators which look forward in Spain point to recovery, and a much better economy than one year ago," Economy Minister Luis de Guindos said in a radio interview on Tuesday.

A 4.4 percent increase in exports in February and an 8.2 percent slide in imports, helped slash Spain's current account deficit to 1.3 billion euros ($1.7 billion), less than a quarter than that reported a year earlier.   Continued...

A woman walks past price-boards in a greengrocer in Barcelona, April 29, 2013. REUTERS/Albert Gea