Spanish economy contracts

July 31st, 2012 - 1:06 pm ICT by IANS  

Madrid, July 31 (IANS) The Spanish economy contracted 0.4 percent in the second quarter of the year, the Spanish National Statistical Institute (INE) reported.

The main cause of this economic downturn is the drop of the domestic consumption, although external demand acted as a counterweight to the drop, reported Xinhua.

Spain’s gross domestic product (GDP) decreased 1 percent year-on-year, accumulating two quarters of negative growth. The Spanish economy has suffered negative growth for three consecutive quarters, taking into account the contraction of the economy in the second quarter of the year.

The INE figures are the same as those revealed by the Bank of Spain last week, when the bank reported that the country’s GDP contracted 0.4 percent in the second quarter and 1 percent year-on-year.

The Spanish economy suffered many fluctuations that have recently calmed down. The European Central Bank (ECB) president Mario Draghi said last Thursday that he would do what was necessary to save the euro.

Germany and France supported this statement and last weekend, Eurogroup president Jean-Claude Juncker affirmed that the ECB and the European Union (EU) are working together to prepare an action that would alleviate pressure on stock markets.

Thanks to these developments, the situation in the Spanish stock market has improved. The market rose to 2.8 percent Monday while the interest rate of the 10-year bond fell below 7 percent from 7.75 percent last Wednesday.

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