Spain has cut its growth forecasts again (or rather, experts have), which means it will ask for more time to solve its problems. And its path to a bailout from its neighbors and bond purchases by the European Central Bank become more complex. As each month passes, and the recession in Spain worsens and unemployment rises, the government of Prime Minister Mariano Rajoy is later and later in publicly admitting its problems. Newspaper El Pais reports that Spain’s gross domestic product will tick down sharply next year, and that its budget deficit will be 6% rather than the 4.5% most recently forecast.
El Pais reported that the Commission forecast a 1.5 percent decline in Spanish gross domestic product in 2013, scarcely any better than a 1.6 percent drop this year. Next year’s Commission forecast is in line with the consensus in a Reuters poll of economists taken a fortnight ago.
However, both are significantly worse than the 0.5 percent contraction expected by the Spanish government in 2013.
Douglas A. McIntyre