- Carsten Brzeski, economist at ING
The downturn in the Spanish economy worsened in the final three months of 2012, as the economy shrank more than expected, adding to concerns that 2013 is going to be another hard year for Mariano Rajoy. Spanish gross domestic product contracted by 0.7% from the previous quarter, the steepest decline since the second quarter of 2009, after a 0.3% dip in the previous quarter. The report made by the National Statistics Institute showed that the recession that started in the final months of 2011 is still weighing on the Eurozone's fourth-largest economy. Earlier this month, a separate report showed that the unemployment rate in the country soared to a fresh high of 26.02% with almost 6 million people being out of work. In order to boost economic growth, Prime Minister Mariano Rajoy responded by announcing a new stimulus package.
"The diagnosis is clear," says Jaime Pastor, political science professor at the Universidad Nacional de Educación a Distancia. "Rajoy has portrayed himself as the leader who averted a bailout, but instead he is not only facing the territorial challenge of Catalonia."
"This illustrates the double credit whammy in the Eurozone. Tightening of credit conditions on supply side and a fall in demand, it's a squeeze on both sides," according to Carsten Brzeski, economist at ING.
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