MercoPress. South Atlantic News Agency

Record contraction of the Spanish economy

The Spanish economy slid deeper into recession in the first quarter of this year, official data showed on Thursday revealing that output shrank by 1.8% from the level in the previous quarter. On an annualized basis the contraction was a record 2.9%, the steepest in half a century.

This was the third monthly contraction in a row after a fall of 1% in the last quarter of last year from the level in the third quarter which had shown negative growth of 0.3%.

The National Statistics Institute, INE, which published the provisional data, said that “the quarterly variation of gross domestic product is minus 1.8 percent”.

The figure was in line with an estimate by the Bank of Spain at the end of April.

The widely accepted definition of recession is two quarters running of contraction from output in the previous quarter.

Spain entered into its first recession for 15 years at the end of 2008 and the global credit crunch worsened a correction which was already underway in its once booming housing sector.

The country's unemployment rate soared to 17.4% in March, double the average of 8.3% for the entire 27-nation European Union, according to the bloc's statistics agency Eurostat.

The IMF has estimated the Spanish economy will contract 3% in 2009. However the Spanish government the percentage is closer to 1.6, but “most dynamic”.