Friday, November 14, 2008

Spain is a single step from the recession, already installed in the Eurozone

The INE certifies that the national GDP contracted by 0.2% between July and September, the first negative record since 1993, Italy and Germany, with two quarters of decline, pushing towards the 15 worst-case scenario in its history

I was calling the crisis and the doors have been opened wide. The specter of recession (two consecutive quarters of negative growth) was installed yesterday for the first time in history the whole of the Eurozone, engullendo of step two of its major powers (Germany and Italy). And it is just a step away from landing in Spain, where the Gross Domestic Product (GDP) registered a contraction of two tenths between July and September for the three preceding months. This is the first fall since 1993 and the worst symptom of the crisis has stopped dry-productive machinery. In the same period of 2007, Spanish GDP increased by 0.9%, half that between April and June, chaining its sixth consecutive quarter of declines.

The advance of national accounts data released by the National Statistics Institute (INE) coincides with the released Oct. 31 by the Bank of Spain, already anticipated two tenths of a hole. The key to the slowdown in activity is in the desceleración domestic demand, with household consumption to fall and an investment in recede, especially in the construction sector, which could not be offset by improved the contribution of the external sector.

The figures confirm the rapid deterioration of the Spanish economy, which is doomed to recession. The government already admitted this week that will be forced to revise down growth forecasts in December before the damage of all indicators. Even more so since all national and international agencies suggest that Spain will record negative growth in 2009, with decreases ranging from 0.7% forecast by the IMF to 1% which provides the service for the Study of BBVA.

Asked about whether the Spanish economy may dodge a recession, the first vice president, Maria Teresa Fernandez de la Vega, said yesterday at the press conference after the Council of Ministers that "Spain can hardly avoid the worsening economic circumstances" and that "we have to live in difficult times. " Faced with that theory, the spokesman for the Economy of the PP, Cristobal Montoro, denounced that the figures show that Spain is suffering a recession horse, "while his counterpart in CiU, Josep Sanchez Llibre said," are paying the consequences the lack of foresight "of the government.

Worse things go on all the countries that handle the euro. The economic crisis has led since the Eurozone entry into recession for the first time in its history since it was launched in 1999, because of a fall of two tenths of GDP in the third quarter, which joins the same decline recorded between April and June. Compared with the same period of 2007, the economy grew by seven tenths Fifteen, half that in the preceding period. Has played against two of its main strongholds, Germany and Italy also have now entered the tunnel: the German GDP fell by five tenths in the second quarter, after declining for four of the previous period, records identical to those of Italy .

Behind, about to accompany them in the fall to the precipice, appear Spain (-0.2%) and the United Kingdom (-0.5). France, which accounted for a drop of three tenths in the second quarter, saves the furniture in extremis with an increase of 0.1% between July and September.

In the EU as a whole nor the picture is more encouraging. The recession is just around the corner after the GDP of the 27 fell 0.2%. Do not escape nor Newcomers, because the Hungarian economy fell a tenth in the last three months and even Estonia and chaining three quarters of contraction, a situation that could be repeated in Latvia. Other new members (Czech Republic, Cyprus, Lithuania and Slovakia) are saved for now certain the recoil and maintain economic dynamism.

Ill-growth data were accompanied, at last, good news on the side of prices. The inflation in the Eurozone fell four tenths in September to 3.2%, while the figure for the whole of the EU fell from 4.2 to 3.7%, a decline for which he was decisive plummeting oil. Thus, the price differential that Spain maintained with the rest of the Eurozone is reduced to four tenths, the lowest level since January 2004.

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