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Spanish economy entered recession in Q4 -report

Published 12/23/2008, 03:16 AM
Updated 12/23/2008, 03:20 AM

MADRID, Dec 23 (Reuters) - Spain's economy contracted during the fourth quarter, putting it into recession for the first time in 15 years, according to a government report cited by a Spanish newspaper on Tuesday.

The Spanish Economy Ministry's synthetic activity indicator or ISA (ISA), which closely tracks gross domestic product (GDP), contracted 1.5 percent between October and December, Spain's El Mundo said.

That would mark Spain' second consecutive quarter of shrinking growth, after quarter-on-quarter GDP contracted 0.2 percent between July and September, putting Spain into recession for the first time since 1993.

Economy Ministry officials were not immediately available to confirm the report on its ISA report, which monitors data such as domestic demand, employment and prices.

Spain releases preliminary fourth quarter GDP data on Feb. 12 and Economy Minister Pedro Solbes has said it is unlikely the economy will escape recession as it is hit by the collapse of a decade-long construction boom and global market turmoil.

Analysts expect Spanish GDP to contract more than 1 percent in 2009, and possibly shrink again in 2010, as unemployment rises over 15 percent next year and approaches 20 percent in 2010.

Spain is expected to make a slow recovery as it tries to develop economic alternatives to residential construction and foreign financing that have collapsed after driving a decade of high growth, averaging 3.8 percent a year.

(Reporting by Andrew Hay; Editing by Tony Austin)

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