Spain

Spain: GDP shrank by 0.3% in 1Q12 after contracting at the same rate in 4Q11, confirming a return to recession. The figures confirm preliminary data issued in Apr. Weaker domestic demand, including household consumption and public spending, had undermined growth as Spain struggles with austerity measures aimed at cleaning up its finances. Spanish exports and its tourism sector have not been able to make up the difference, owing to a generally weaker economic climate elsewhere in Europe. Spanish officials acknowledge that the economy is going through one of its toughest ever moments, but have voiced optimism for the future. Economy Minister Luis de Guindos has estimated that GDP will shrink by 1.7% this year, but forecasts slight growth of 0.2% in 2013. Analysts at other banks are less optimistic. The national foundation of savings banks, Funcas estimates that the recession will last until 2H13. Commerzbank expects Spain to be the only eurozone country still in recession next year, with a drop in GDP of 0.3%.