The effect of the crisis on Spain’s economy

Spanish economy shrinks by 2.9% during first three months of 2009

The Spanish economy went down by 2.9% in the first quarter of 2009 compared to the same period for 2008 and by 1.8% compared to the previous quarter. In both cases these are the worst figures registered in one quarter since 1970 when the Spanish National Institute for Statistics (INE) began recording statistics on the economy.

This fall in the economy coincides with figures offered by the Bank of Spain at the end of April. Government forecasts for 2009 for the performance of the economy estimate a fall of 1.6% while international bodies have placed this figure at 3%.

According to information provided by the INE today the fall in GDP in the Spanish economy was the result of fall in national demand which was only partly compensated by positive results in the exports sector. The fall in GDP by 2.9% is the second quarterly fall in the economy following the fall of 0.7% in the last quarter of 2008 compared to the previous year.

It also contrasts sharply with the 2.7% growth in GDP registered in the first quarter of 2008.

The variation in the economy in terms of the results for previous quarters shows a fall of 1.8% for the first quarter of 2009 compared to falls of 1% and 0.3% for the fourth and third quarters of 2008 respectively. These results show that GDP has shrunk for three consecutive quarters. The Spanish economy officially entered into a recession at the end of 2008 after negative growth for two quarters in a row.

The figures published today coincide with the estimations made by the Bank of Spain in its latest economic bulletin in which it said that the fall in GDP had intensified in Spain during the first three months of 2009 in the context of a recessive world economy characterized by lack of confidence in the financial system, the collapse of international commerce and instability in financial markets.