Spain's economy contracted in the third quarter, although at a slower pace than in previous quarters, official data showed yesterday, contrasting with a return to growth elsewhere in Europe.
Gross domestic product declined 0.3 per cent from the previous quarter, its fifth straight quarterly contraction, and was down four per cent from a year earlier, the National Statistics Institute said in preliminary figures.
It follows a contraction of 1.1 per cent in the second quarter, 1.6 per cent in the first quarter, 1.1 per cent in the three months to December and 0.6 per cent in the third quarter of 2008.
The statistics office said the slowdown in the pace of economic contraction was due to "a less negative contribution of domestic demand and a positive contribution of exterior demand" as government stimulus measures helped smooth the decline in activity and a return to growth in other nations aided exports.
Economy Minister Elena Salgado said she was "satisfied" with the figures.
"We expect that the results of the next quarters with our predictions and they will be better," she told reporters as she entered Parliament.
The government expects the economy, Europe's fifth largest, to shrink 3.6 per cent this year and return to growth by the second half of 2010.
The latest quarterly results leave Spain, along with Britain which unexpectedly slumped 0.4 per cent in the third quarter, as the only large European economies still stuck in recession, usually defined as a drop in GDP for two or more consecutive quarters.
The European Commission forecasts the entire 16 member eurozone likely expanded during the third quarter.
Eurozone heavyweights France and Germany will publish third quarter GDP data today. Both nations posted surprise economic growth in the second quarter of 2009, meaning their recessions were technically over.
The Spanish economy has proved especially vulnerable to the global credit crunch because its growth relied heavily on credit-fueled domestic demand and a property boom boosted by easy access to loans that has collapsed, leaving around one million new homes unsold.
Prime Minister Jose Luis Rodriguez Zapatero's Socialist government has responded to the economic slump by putting in place a stimulus plan worth more than two per cent of GDP this year which it says is the largest in Europe. The plan includes a massive works programme, which has torn up vast swatches of Spanish cities as workers extend or repair roads and pavements, that has failed to prevent the jobless rate from soaring.
Spain's unemployment rate has doubled over the past two years to hit nearly 18 per cent, the highest level in Europe, with construction workers leading the job losses.
The country of just over 46 million people accounts for roughly half of the rise in the number of jobless in the eurozone over the last year, according to the European Union's statistics office Eurostat.
At the height of its 15-year boom, Spain was creating about half of all new jobs in the eurozone, which drew millions of immigrants, especially from Latin America and Eastern Europe.