OFFICIAL statistics on Spain’s economy, released yesterday, suggest that the embattled Mediterranean country nearly exited recession in the second quarter of the year.
The government recorded only a 0.1 per cent contraction in GDP between April and June, the shallowest seen by the country since 2011, following the news announced earlier this month that the Eurozone exited recession in same three-month period.
The mild fall in output suggests that the country may technically emerge from its downturn in the third quarter, returning to growth for the first time in eight quarters with a moderate seasonal boost.
Despite the prospect of some meagre growth, the Mediterranean economy is still struggling, with unemployment at 26 per cent. The International Monetary Fund even expects more than a quarter of Spaniards to be out of work for the next five years.
Yet a string of positive news was announced for other large Eurozone economies yesterday, with an improvement in France’s business climate registered, lagging just behind the level which would signal improving conditions overall.
Italy’s consumer confidence for August also registered the highest reading for over 18 months. Prime Minister Enrico Letta recently postponed the rise in property taxes which had been planned, and continued an programme of support for unemployed Italians.
Despite early indications that the Eurozone may be entering a nascent recovery, and the technical end of the currency union’s recession, Capital Economics’ chief European economist Jonathan Loynes suggested that the European Central Bank would continue to reiterate that the euro area economy requires continued loose monetary policy.
Loynes commented: “We doubt that Mr Draghi will feel any great need to make such changes, at least for now”.
He added: “The Eurozone’s economic recovery is still rather weaker than those in the UK and US. Although most activity indicators have picked up further over the last month, they generally remain at lower levels than their overseas equivalents”.