The Spanish economy is in recession for the first time since 1993, contracting during the final two quarters of 2008, an estimate by the central bank in Madrid shows today.
Spanish gross domestic product (GDP) had shrunk by 1.1% in the fourth quarter of 2008 compared with the previous three month period, when it contracted 0.2% on a quarterly basis, the bank said.
The generally-used technical definition of a recession is two quarters of negative economic growth in a row.
Spain's once-buoyant economy, the fifth-biggest in Europe, has suffered as the global financial crisis hit the key construction sector, which was already weakened by oversupply and rising interest rates.
The Spanish government last week slashed its forecast for the economy to a contraction of 1.6% this year from the growth of 1% previously forecast. It predicts that the country's unemployment rate, already the highest in the 27-nation European Union, will rise to 15.9% in 2009 after having dropped to 7.95% as recently as the second quarter of 2007, its lowest level since 1978.
Last month the International Monetary Fund warned the Spanish economy risks entering an extended period of stagnation unless sweeping structural reforms are carried out.
