According to the latest figures released by the National Institute of Statistics Spain’s GDP contracted for a third consecutive quarter confirming the country is still in recession. A technical recession is commonly defined as two consecutive quarters of economic contraction.
Gross Domestic Product (GDP) generated by the Spanish economy registered a real variation of –0.4%, one tenth lower than the previous quarter.
The interannual GDP variation was –1.0%, as compared with 0.4%, for the first quarter. This behaviour was due to the more negative contribution by domestic demand, partly compensated by the positive contribution of foreign demand and order similar to that recorded in the previous quarter.
Euro group leader Jean-Claude Juncker has called on the ECB to step in to help cut Spain’s debt costs.
“We will work in close agreement with the ECB, and we will, as ECB President Mario Draghi said, see results,” Mr Juncker said speaking to press.
“I don’t want to drive expectations, but I must say, we have reached a decisive phase.”
Spain’s consumer price index also increased with an increase of 2.2%, year-on-year. The increase was higher than expectations due to the increase in medicine costs put in place by the government to save money and reduce the deficit.
Economists warned price hikes, and especially a 3% rise in sales tax due, would distort consumer prices while the deepening recession reflected slower domestic demand.