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Spanish economic plunge slows officially in Q3

* Gross domestic product fell 0.3 percent from a quarter earlier

MADRID: The pace of Spain’s economic contraction eased in the third quarter as a deterioration in domestic demand slowed, official data showed on Wednesday, contrasting with a return to growth in the rest of the eurozone during the period.

Spanish gross domestic product fell 0.3 percent from a quarter earlier, its fifth straight quarterly decline, and was down 4.0 percent from a year earlier, according to final figures from the national statistics institute.

The numbers were in line with preliminary data it published last week and they compare with a second quarter drop in gross domestic product of 1.1 percent on a quarterly basis and of 4.2 percent on a 12-month basis. Europe’s fifth-biggest economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fueled domestic demand and a property boom boosted by easy access to loans.

The entire 16-nation eurozone expanded in the third quarter by 0.4 percent, returning to growth after five consecutive quarters of shrinking output. Spain and Britain are now the only large European economies still technically stuck in recession, usually defined as a drop in GDP for two or more consecutive quarters.

The statistics office said the pace of the economic contraction softened in the third quarter owing to an improvement in domestic demand after government stimulus measures. Household spending declined 5.1 percent from a year earlier after falling six percent in the second quarter, it said.

British luxury-goods company Burberry blamed the ‘extremely challenging’ Spanish market for the first-half profit slump of 24 percent it posted on Tuesday. The company’s sales in Spain for the six months ending September 30 reached 49.1 million pounds (95.8 million euros), compared with 70.7 million pounds a year earlier. It has slashed 300 jobs in Spain, representing about half its total work force in the country.

Prime Minister Jose Luis Rodriguez Zapatero’s Socialist government has responded to the economic slump by putting in place a stimulus plan worth more than two percent of GDP this year which it says is the largest in Europe.

The plan includes a massive works programme, which has torn up vast swatches of Spanish cities as workers extend or repair roads and pavements, that has failed to prevent the jobless rate from soaring. The government predicts GDP will post a 3.6-percent drop in 2009 before returning to growth during the second half of next year.

The economic downturn has had a political cost. The conservative opposition People’s Party would win 41 percent of the vote if elections were held now, compared with 37.7 percent for the ruling Socialist Party, according to a poll published on Nov 2 by the state-run Centre for Sociological Research. afp

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