Spain recession deepened in Q4, central bank says

AP News
Posted: Jan 23, 2013 9:27 AM
Spain recession deepened in Q4, central bank says

MADRID (AP) — Spain's recession deepened in the fourth quarter of 2012, when the economy shrank by 0.6 percent compared with the previous three-month period, according to preliminary estimates from the Bank of Spain on Wednesday.

It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 percent in the third quarter.

The bank said economic activity was down 1.7 percent in the fourth quarter from the year-earlier period. And it estimates the economy shrank 1.3 percent for the whole of 2012.

The National Statistics Institute is to announce the official economic growth figures on Jan. 30, while Europe's main statistics office Eurostat unveils its estimate on Feb. 14.

Spain, with 25 percent unemployment, is in its second recession in three years following the collapse of its once key real estate sector in 2008.

Also Wednesday, Finance Minister Cristobal Montoro told a parliamentary commission that a tax evasion amnesty aimed at boosting revenue for the country had put some €40 billion ($53.3 billion) back into circulation in the Spanish economy, representing some 4 percent of the country's annual gross domestic product.

Montoro recently said the amnesty had reaped €1.2 billion in taxes — short of the government's €2.5 billion target.

The amnesty, which came into effect last June and ended in November, has been much criticized as it was seen as helping tax evaders while Spaniards suffered cuts in wages and services because of the country's economic crisis.

Opposition politicians pointed out that the figure released Wednesday meant the tax rate paid by those availing of the amnesty was three percent, and not 10 percent as originally announced by the government.