Bloomberg News

Spain Recession Eases for Second Quarter as Rajoy Eyes Recovery

July 23, 2013

Spain’s recession eased for a second quarter in the three months through June, underscoring Prime Minister Mariano Rajoy’s forecast of a recovery in the euro region’s fourth-largest economy.

Gross domestic product shrank 0.1 percent from the first quarter, when it dropped 0.5 percent, the Bank of Spain said in its monthly bulletin today. That’s the eight quarterly contraction. Today’s data beat the median estimate of a 0.3 percent decline forecast in Bloomberg News’ monthly Spanish economy survey of 36 economists.

Rajoy is relying on growing exports and an upsurge in summer tourism to end an economic slump that started in 2008 after the end of a decade-long real estate boom. The nation’s public debt load is approaching 100 percent of GDP after Spain received European Union aid to bail out a banking sector that is still struggling with bad loans.

The yield on Spain’s 10-year benchmark bond was unchanged at 4.61 percent at 10:12 a.m. in Madrid. That compares with a euro-era high of 7.75 percent after Rajoy clinched European aid in July 2012, before European Central Bank President Mario Draghi’s pledge to support the euro helped lower European sovereigns’ borrowing costs.

The figures for unemployment in the three months through June are due on July 25, with economists forecasting an increase to 27.2 percent, according to the median of seven estimates in a Bloomberg News survey. The Organization for Economic Cooperation and Development predicts it’ll climb to around 28 percent next year.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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