Spanish Prime Minister Jose Luis Zapatero has said that although the government’s official figures for GDP growth this year stand at 1.3 percent, “We are going through a period of financial tension and economic uncertainty, particularly because of the situation in Greece, which could affect these forecasts.”
He went on to say that growth was likely in the third quarter but at a pace similar to the previous three months. Quarterly growth in the Spain slowed to 0.2% in the period April-June and to 0.4% in the first three months of the year.
José Manuel Campa, the secretary of state for the economy, said the state of the global economy would make it “more difficult” for Spains economy to grow 1.3 percent this year.
According to El Pais, the latest upsurge in the euro-zone debt crisis has pushed Spanish government bond yields higher making it more costly for local banks to tap the international wholesale markets to meet their liquidity requirements.
Tighter liquidity conditions for local banks could in turn reduce the amount of credit they can grant, which further restricts economic growth.