Yesterday José Manuel Campa, the Secretary of State for the Economy, claimed that the Spanish economy is fairing better than its EU neighbours and that the government is confident that the worst of the recession is over. The latest figures show that the Spanish economy has shrunk by 4.2% compared to the average shrinkage of 4.6% in other euro zone economies.
However, other important EU economies – France and Germany – have already showed signs of economic recovery while it is forecast that Spain will have to wait until the second quarter of next year to see signs of recovery.
While the GDP of other EU economies only fell by 0.1% in the second quarter of 2009 the Spanish GDP fell by 1.1% in the same quarter. This means that the Spanish economy has been in recession for a year. The one positive point is that the economy shrank less in the second quarter of this year compared to the first quarter.
This is the largest fall in the Spanish economy since the National Institute for Statistics (INE) began compiling records in 1970.
The figures published by the INE yesterday are worse than those forecast by the Bank of Spain and the INE itself.
And the sharp fall in internal demand over the past year due to the credit crunch and rising unemployement has also hit the Spanish econocmy hard because it represents 60% of all the wealth generated in Spain.