The INE, Spain’s official statistics bureau, reported that its preview estimate of Quarterly National Accounts showed GDP off 0.4% in the second quarter compared to the first. It also announced that, “The interannual rate of the Gross Domestic Product decreased 1.0% in the second quarter of 2012.”
Spain’s economic contraction is such that its borrowing costs are likely to remain high — probably 7% for 10-year sovereign paper. The information also offers little hope that Spain’s current unemployment rate of 24.6% will come down soon.
Spain is slated to get 100 hundred billion euros to bail out its banks. There are discussions among its neighbors and the IMF to provide additional aid to help the country with its deficit. The central government has pushed out ambitious austerity goals to 2014. Not a single on of these will right an economy that is in near free-fall.
For the time being, there is no saving Spain.
Douglas A. McIntyre
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