Add to all of Spain’s other woes, its economy moved into recession as gross domestic product fell 0.3% from the fourth quarter of 2011 to the first quarter of this year. It dropped by the same percentage from the third to fourth quarter of last year. The figures were released by the country’s central statistics bureau.
The news comes at a time when the country’s two largest unions have taken to the streets to protest austerity measures. Nearly one in four workers in Spain are unemployed — a number that matches the bottom of joblessness in the Great Depression.
Spain, until only recently, insisted that it could dodge drops in GDP and collapses of its bank and real estate markets. It would, therefore, not need aid from the European Union, Spain’s finance minister said recently.
Spain will need a bailout soon. Its economy has contracted too quickly. Austerity will hasten the contraction. Government cuts will be swamped by a drop in government receipts.
The only question now is what the bailout will cost and whether the EU and IMF have funds to handle it.
Douglas A. McIntyre